[Federal Register Volume 63, Number 132 (Friday, July 10, 1998)]
[Rules and Regulations]
[Pages 37258-37280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18272]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 81

[CA-008-BU, FRL-6120-4]


Designation of Areas for Air Quality Planning Purposes; State of 
California; Redesignation of the San Francisco Bay Area to 
Nonattainment for Ozone

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is taking final action to redesignate the San Francisco 
Bay Area (Bay Area) as a nonattainment area for the 1-hour ozone 
National Ambient Air Quality Standard (NAAQS). The Clean

[[Page 37259]]

Air Act (CAA or Act) provides that EPA may at any time revise the 
designation of an area on the basis of air quality, planning and 
control considerations, following notification to the Governor. On 
August 21, 1997, EPA notified the Governor of California that the 
Agency intended to propose to redesignate the Bay Area from attainment 
to nonattainment of the federal 1-hour ozone standard, based on a total 
of 43 exceedances and 17 violations of the standard since the June 1995 
redesignation to attainment.

EFFECTIVE DATE: This action is effective on August 10, 1998.

ADDRESSES: A copy of this document and related information are 
available in the air programs section of EPA Region 9's website, http:/
/www.epa.gov/region09/air. The docket for this rulemaking is available 
for inspection during normal business hours at EPA Region 9, Planning 
Office, Air Division, 17th Floor, 75 Hawthorne Street, San Francisco, 
California 94105. A reasonable fee may be charged for copying parts of 
the docket. Please call (415) 744-1249 or 744-1251 for assistance.

FOR FURTHER INFORMATION CONTACT: Regina Spindler (415) 744-1251 or 
Celia Bloomfield (415) 744-1249, Planning Office (AIR-2), Air Division, 
EPA Region 9, 75 Hawthorne Street, San Francisco, CA 94105.

SUPPLEMENTARY INFORMATION:

Outline

I. Executive Summary
II. Background
    A. Original Nonattainment Designation and Redesignation and 
Redesignation to Attainment
    B. Subsequent Violations and Petitions to Redesignate the Bay 
Area to Nonattainment
    C. Applicable Statutory Provisions
    D. Notification to the Governor and Governor's Response
    E. Proposed Action
III. Summary of Public Comments and EPA Response
    A. Introduction
    B. Response of the State
    C. Overview of Public Comments
    D. Specific Comments and EPA Response
    1. Comments Relating to the Basis of EPA's Proposal to 
Redesignate the Bay Area to Nonattainment
    a. Air Quality and Emissions
    b. Legal Authority
    i. General Comments on Mandatory and Discretionary Authorities 
to Redesignate
    ii. Authority to Redesignate without Classification
    c. Policy Issues
    i. Public Notification and Public Perception
    ii. Impact of the Bay Area Emissions on Downwind Nonattainment 
Areas and Issues of Equity
    iii. Effect of Redesignation on Limited Air Pollution Control 
Resources
    iv. Alternatives to Redesignation
    2. Comments Relating to EPA's Proposed SIP Requirements
    a. Emissions Inventory
    b. Attainment Assessment
    c. Control Measures
    i. Suggested Measures
    ii. NO<INF>X</INF> Waiver and Efficacy of NO<INF>X</INF> 
Controls
    d. Attainment Deadline
    e. Planning Schedule
    3. Comments on Miscellaneous Issues
    a. Conformity
    b. Congestion Mitigation and Air Quality (CMAQ) Funding
    c. Unfunded Mandates Reform Act (UMRA)
    d. Procedural Obligations under CAA, Section 107 and the 
Administrative Procedures Act (APA)
IV. Final Action
    A. Overview
    B. SIP Requirements and Deadlines
    C. Changes from Proposal
V. Emission Reduction Opportunities
    A. Stationary Sources
    B. Transportation Control Measures
    C. Voluntary Measures
    D. Enhanced Inspection and Maintenance
    E. Mitigating Emissions Increases from Oakland Seaport and 
Airport Expansion Projects
VI. Administrative Requirements
    A. Executive Order (E.O.) 12866
    B. Regulatory Flexibility
    C. Unfunded Mandates Reform Act
    D. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    E. Submission to Congress and the General Accounting Office

I. Executive Summary

    On December 19, 1997 EPA published a Notice of Proposed Rulemaking 
to redesignate the Bay Area to nonattainment of the federal 1-hour 
ozone standard. During the 60-day public comment period that followed 
publication, EPA received comments both in support of and in opposition 
to our proposed action. All commenters, regardless of their views on 
the proposed redesignation or the proposed requirements associated with 
redesignation, expressed strong support for clean air progress in the 
Bay Area. EPA appreciates the thoughtful comments on the proposal and 
greatly values the commenters' commitment to improved air quality and 
public health protection in the Bay Area. EPA has made significant 
changes and clarifications in response to the comments and EPA believes 
the final action recognizes the innovation and collaborative efforts 
that can contribute to clean air in the Bay Area.
    After carefully considering all of the comments received, EPA has 
decided to finalize the redesignation of the Bay Area to nonattainment 
of the 1-hour ozone standard while clarifying and streamlining the 
actions necessary to reach attainment. Although the Bay Area Air 
Quality Management District (BAAQMD), the California Air Resources 
Board (CARB), other regulatory agencies, businesses, and the community 
as a whole have made great strides in improving air quality in the Bay 
Area, there is still more work to be done. Redesignation is the most 
appropriate course of action to assure further air quality improvements 
and protection of public health and should place minimal burdens on the 
local economy, residents, industry and regulators.
    When the federal ozone standard is exceeded, people, and in 
particular children, the elderly, and those with respiratory diseases, 
may experience ozone's ill effects, such as chest pain, cough, lung 
inflammation, respiratory infection, and chronic bronchitis. In light 
of these significant public health concerns, EPA believes that it is 
important to provide the public with accurate information and the 
correct message that ozone pollution is still a problem.
    EPA is compelled to redesignate the Bay Area to nonattainment 
because of the numerous and widespread violations of the 1-hour ozone 
standard, a standard that was designed to protect public health. The 
Bay Area's air quality during 1996 ranked as the 6th worst in the 
nation and for the three-year period 1995-1997, it was the 8th 
smoggiest of the major metropolitan areas in the country. The absence 
of violations in 1997 is a positive sign but the Agency does not feel 
that the clean smog season last year proves that the serious ozone 
problem revealed in 1995 and 1996 has been solved. Compliance with the 
standard is measured over a three-year period so as to account for the 
effects of weather and other meteorological conditions that can work to 
either the advantage or disadvantage of air quality. This is 
particularly relevant to the Bay Area's case since the meteorological 
conditions prevailing on the West Coast during 1997 were unusually 
favorable to good air quality and, according to an October 1997 report 
by the BAAQMD, the ozone-conducive meteorology that occurred in 1995 
and 1996 is likely to recur. The BAAQMD report also revealed that 
during the 1990s ``progress appears to have lapsed; there appears to 
have been an increase in ozone potential, after accounting for 
meteorology.''
    The number of violations of this public health standard that 
occurred in the Bay Area during 1995 and 1996 is

[[Page 37260]]

especially significant when compared to the air quality in other parts 
of the country and the nonattainment designation and requirements 
applicable to those areas. For example, EPA recently reclassified or 
``bumped-up'' the Phoenix and Santa Barbara areas from ``moderate'' to 
``serious'' nonattainment areas for failure to attain the ozone 
standard by 1996. This ``bump-up'' to the ``serious'' nonattainment 
classification means that these areas must comply with additional 
planning and control requirements (e.g. attainment demonstration, 
reasonable further progress demonstration, enhanced vehicle inspection 
and maintenance program, Photochemical Assessment Monitoring) and must 
attain the ozone standard by 1999 or face ``bump-up'' to the severe 
classification, which would impose still more requirements. Phoenix 
monitored 13 violations of the ozone standard, and Santa Barbara 
recorded 7 violations, during the three-year period 1994-1996. The Bay 
Area experienced 17 violations during that same three-year period. Such 
a comparison reinforces the appropriateness of a nonattainment 
designation for the Bay Area.
    EPA concluded that a redesignation to nonattainment not only 
accurately describes air quality in the Bay Area, but also provides an 
opportunity for reevaluating the causes of the Bay Area's ozone 
violations, the quantity of emission reductions needed to attain the 
health-based standard, and the measures that will achieve those 
reductions quickly. Some believe that EPA should not proceed with 
redesignation under the 1-hour standard, and that the BAAQMD should 
instead focus all its energies on planning for the revised 8-hour ozone 
standard. EPA is convinced, however, that some near-term action is 
essential to protecting the health and welfare of the Bay Area 
residents. Emission reduction strategies will be evaluated and put in 
place much sooner through a redesignation under the 1-hour standard 
than under a plan to meet the revised 8-hour ozone standard. In 
addition, everything that the Bay Area does to meet the 1-hour standard 
will help in meeting the more protective 8-hour standard. The Bay Area 
won't have to complete its planning for the 8-hour standard until 2003 
or comply with the new standard until 2005 at the earliest. That is 
five years during which Bay Area residents would be breathing dirtier 
air than they should be. It is the public's right, and EPA's 
obligation, to be assured that current health standards are met now.
    EPA is redesignating the Bay Area to nonattainment without 
assigning it a specific classification. The classification system 
(marginal, moderate, serious, severe, or extreme) associated with other 
current ozone nonattainment areas was created as part of the 1990 Clean 
Air Act amendments to match a nonattainment area's planning and control 
requirements with the severity of the area's ozone problem. The Bay 
Area is in a unique position. It was designated nonattainment under the 
1990 amendments, redesignated to attainment after implementing most of 
the moderate nonattainment area requirements, and is now being returned 
to nonattainment. The existing Clean Air Act classification system does 
not specifically apply to the Bay Area. In order to allow maximum 
flexibility and in keeping with the best legal reading of the Act, EPA 
is redesignating the Bay Area under the longstanding general 
nonattainment provisions of the Act, which have no associated 
classifications. During public comment, the flexibility allowed by this 
approach generated uncertainty as to the planning and control 
requirements for the Bay Area. In response to this concern, and to make 
sure the Air District's time and energy are spent on control measures, 
not unnecessary paperwork, EPA has been more specific in the final 
rulemaking notice describing what is required of the Bay Area.
    Redesignation should not result in a burdensome and duplicative 
planning effort. EPA wants the District and its co-lead agencies to 
focus on emission reductions, not paperwork. EPA is asking for only 
three plan elements: the existing 1995 emissions inventory for Volatile 
Organic Compounds (VOC) and Nitrogen Oxides (NO<INF>X</INF>); an 
assessment of emission reductions, using available data and technical 
analyses, needed to attain the federal standard; and control measures 
to achieve those reductions. EPA will accept, in addition to or in lieu 
of adopted regulations, control measures with enforceable commitments 
to adopt in regulatory form and implement by specified dates sufficient 
to attain the 1-hour ozone standard by the attainment date. It is an 
additional public safeguard to make the control measures in this plan 
federally enforceable elements of the State Implementation Plan (SIP), 
since only in this way can the EPA and the public ensure that the 
commitments in the plan are fully implemented and the plan's promised 
air quality benefits are realized.
    In response to public comment, EPA has modified both the schedule 
and content for State submissions and the attainment date. First, EPA 
is requiring only one formal State Implementation Plan (SIP) submittal 
instead of two. The one formal SIP submittal will include the emissions 
inventory, attainment assessment, and control measures so that the 
District can avoid having to undergo two public hearing and adoption 
processes, one for the inventory and assessment and a second for the 
control measures. EPA is allowing the BAAQMD to make a single SIP 
submittal with the understanding, pursuant to a letter of commitment 
from the Air District and co-lead agencies dated June 23, 1998, that 
the emissions inventory and attainment assessment will be made 
available to the public and submitted informally to EPA within 5 months 
after signature of the final redesignation by the Regional 
Administrator. This early, informal submittal will allow EPA to review 
the draft inventory and assessment and work with the District to 
address any deficiencies.
    Second, EPA has extended the deadlines for the formal SIP submittal 
from May 1998 for the emissions inventory and attainment assessment, 
and from September 1998 for the adopted control measures and/or 
enforceable commitments, to June 15, 1999 for both. This extension 
gives the BAAQMD and its co-lead agencies more time to address the 
substantive requirements of the redesignation and carry out their 
formal adoption and submittal processes.
    Third, EPA has extended the attainment deadline from November 15, 
1999 to November 15, 2000 in order to allow additional time for the 
emission reduction strategies to take effect on air quality in the Bay 
Area.
    Fourth, both CARB and the BAAQMD submitted compelling arguments 
that a weekend emissions inventory was too difficult and resource 
intensive to complete at this time, and so EPA has streamlined the SIP 
requirements still further by eliminating that obligation.
    Finally, in response to public comment, EPA has eliminated the 
requirement to submit an emissions inventory for carbon monoxide (CO).
    The above changes from the proposed redesignation are summarized as 
follows:

[[Page 37261]]



------------------------------------------------------------------------
                                             Final--weekend emissions   
 Proposal--weekend emissions inventory    inventory and CO inventory not
       and CO inventory required                     required           
------------------------------------------------------------------------
Emissions inventory and attainment       Final emissions inventory and  
 assessment due 5/1/98.                   attainment assessment due 6/15/
                                          99. (Commitment to make draft 
                                          available to EPA and the      
                                          public by 11/25/98.)          
Adopted regulations and/or control       Adopted regulations and/or     
 measures with enforceable commitments    control measures with         
 due 9/1/98.                              enforceable commitments and   
                                          final emissions inventory and 
                                          attainment assessment due 6/15/
                                          99.                           
Attainment date of 11/15/99............  Attainment date of 11/15/2000. 
------------------------------------------------------------------------

    EPA recognizes that innovative methods, including voluntary 
measures, have the potential to contribute in a cost-effective manner 
to emission reductions needed for progress toward attainment. To 
promote the creation and expansion of effective voluntary mobile source 
programs, the Agency has developed a new policy that allows SIP credit 
for such programs.\1\ The Bay Area has already demonstrated leadership 
in crafting innovative approaches to air quality problems through the 
``Spare-the-Air'' and Silicon Valley ECOPASS programs. EPA is eager to 
work with the local government agencies and members of the business and 
environmental communities, who are critical to building public support 
for voluntary programs, to explore opportunities for innovation and to 
ensure that the voluntary measures stand the test of public 
accountability.
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    \1\ Memorandum dated October 23, 1997 entitled, ``Guidance on 
Incorporating Voluntary Mobile Sourve Emission Reduction Programs in 
State Implementation Plans (SIPs).''
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II. Background

A. Original Nonattainment Designation and Redesignation to Attainment

    For more detailed information on the Bay Area's original ozone 
nonattainment designation, classification under the 1990 Clean Air Act 
Amendments, and redesignation to attainment, the reader is directed to 
EPA's proposed redesignation, published on December 19, 1997 (62 FR 
66578-66583).
    The Bay Area was initially designated under section 107 of the 1977 
CAA as nonattainment for ozone on March 3, 1978 (40 CFR part 81.305). 
The Bay Area consists of the following counties: Alameda, Contra Costa, 
Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano (part), and 
Sonoma (part).<SUP>2</SUP> Following the 1990 amendments to the Act, 
the area was classified by operation of law, under section 181(a), as a 
``moderate'' ozone nonattainment area. (56 FR 56694, Nov. 6, 1991). On 
May 22, 1995 (60 FR 27028), EPA approved the maintenance plan adopted 
by BAAQMD, the Metropolitan Transportation Commission (MTC), and the 
Association of Bay Area Governments (ABAG) and submitted to EPA by 
CARB. In the same document, EPA redesignated the area to attainment for 
ozone, based on 3 violation-free years of data from the Bay Area's 
official monitoring network.
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    \2\ For a description of those portions of Solano and Sonoma 
County that are included in the Bay Area, the reader is directed to 
40 CFR part 81.21.
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B. Subsequent Violations and Petitions to Redesignate the Bay Area to 
Nonattainment

    Despite implementation of most of the measures in the Bay Area's 
maintenance plan, the monitoring network has recorded 43 exceedances 
and 17 violations of the federal 1-hour ozone standard over the years 
1995-1996.<SUP>3</SUP>
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    \3\ An exceedance of the 1-hour ozone standard occurs when the 
hourly average ozone concentration at a given monitoring site is 
greater than or equal to .125 parts per million (ppm). A violation 
of the standard occurs when the expected number of days per calendar 
year with maximum hourly average ozone concentrations at or above 
.125 ppm is greater than one. 40 CFR part 50.9. The average number 
of days is calculated for a 3-year period. 40 CFR part 50, Appendix 
H. This 3-year period was established to reduce the impact of yearly 
fluctuations in ozone levels. Table 1 in EPA's proposed 
redesignation (62 FR 66579) lists both the exceedances and the 3-
year average number of days over the 1-hour ozone standard for the 
period 1994-1996 at Bay Area monitoring sites in the official State 
and Local Monitoring (SLAMS) network.
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    EPA has received 2 petitions requesting that the Administrator 
redesignate the Bay Area to nonattainment with the federal 1-hour ozone 
standard. On March 31, 1997, the Sierra Club and Communities for a 
Better Environment (CBE) requested that EPA withdraw the 1995 
redesignation action, or alternatively redesignate the area to 
nonattainment. The Sierra Club also requested that EPA issue a CAA 
section 110(k)(5) SIP call based on the inadequacy of the current SIP. 
On July 14, 1997, U.S. Congressman Gary Condit and a coalition of 
federal, state and local elected officials and public interest and 
industry groups from downwind areas (primarily the San Joaquin Valley) 
petitioned EPA to withdraw the 1995 redesignation to attainment, or 
alternatively redesignate the area to nonattainment, and issue a SIP 
call. Congressman Condit incorporated this petition in his public 
comment on the proposed action, and the petition is summarized in more 
detail in section III.C., Overview of Public Comments.

C. Applicable Statutory Provisions

    Section 107(d)(3) of the Act gives the Administrator the authority 
to redesignate areas. Under this provision, the Administrator may 
``(O)n the basis of air quality data, planning and control 
considerations, or any other air quality-related considerations the 
Administrator deems appropriate, * * * at any time notify the Governor 
of any State that available information indicates that the designation 
of any area * * * should be revised.'' Section 107(d)(3)(A). The 
Governor then has 120 days to submit the redesignation, as the Governor 
considers appropriate. Section 107(d)(3)(B). The Administrator must 
promulgate the redesignation within 120 days of the Governor's 
response. The Administrator may make any modifications to the 
Governor's redesignation which she deems necessary, but must notify the 
Governor of such changes 60 days before promulgating a final 
redesignation. If the Governor does not submit the redesignation, the 
Administrator shall promulgate the redesignation which she deems 
appropriate. Section 107(d)(3)(C).

D. Notification to the Governor and the Governor's Response

    EPA notified the Governor of California by letter dated August 21, 
1997, that EPA believes that the Bay Area should be redesignated to 
nonattainment, based on repeated violations of the ozone NAAQS. In the 
letter to the Governor, EPA proposed that the Bay Area be classified as 
a ``moderate'' nonattainment area, and that the area be required to 
submit by March 1, 1998, an emissions inventory and an attainment 
assessment; submit by May 1, 1998, a schedule and plan for completing a 
field study and modeling; and submit by September 1, 1998, rules and/or 
control measures sufficient to attain the 1-hour ozone NAAQS by 1999.
    The Governor responded to this letter on December 10, 1997. Noting 
that the Bay Area had recorded no exceedances of the 1-hour ozone NAAQS 
in 1997, the

[[Page 37262]]

Governor opposed the redesignation, preferring that EPA allow the 
BAAQMD maintenance plan, subsequent BAAQMD measures, and CARB measures 
to ensure that the area would not violate the ozone NAAQS in the 
future. See sections III.B. and III.D. below for a more detailed 
summary of the Governor's comments and EPA's response.

E. Proposed Action

    On December 11, 1997, EPA issued its proposal to redesignate the 
San Francisco Bay Area to nonattainment for the 1-hour ozone NAAQS 
because ozone levels have violated the federal standard 17 times over 
the 3-year period 1994-1996. The proposal was published on December 19, 
1997, and invited public comment through February 17, 1998.
    After summarizing applicable CAA provisions and the Bay Area's 
record of exceedances and violations, EPA proposed to require the 
BAAQMD and its co-lead agencies to develop and submit a SIP revision 
designed to provide for attainment of the 1-hour ozone NAAQS by 1999. 
EPA's proposal set forth the Agency's reasons for concluding that the 
Bay Area should not be classified under subpart 2 of the CAA, but 
should rather be subject to the basic SIP requirements of section 110 
and the general nonattainment plan requirements of section 172 (62 FR 
66580). Finally, EPA proposed that the State be required to submit SIP 
revisions on the schedule in the table reproduced below, labeled 
``Proposed Schedule of Submittal of Revisions to the State 
Implementation Plan for Ozone for the San Francisco Bay Area.''

 Proposed Schedule of Submittal of Revisions to the State Implementation
Plan for Ozone for the San Francisco Bay Area (62 FR 66578, December 19,
                                  1997)                                 
------------------------------------------------------------------------
               Action/SIP submittal                         Date        
------------------------------------------------------------------------
Current and complete baseline annual average and    5/1/98              
 summer weekday and weekend day emissions                               
 inventory for volatile organic compounds (VOC),                        
 nitrogen oxides (NO<INF>X), and carbon monoxide.                            
Assessment, employing available modeling            5/1/98              
 information, of the level of emission reductions                       
 needed to attain the current 1-hour ozone                              
 National Ambient Air Quality Standard (NAAQS).                         
 This assessment should take into account the                           
 meteorological conditions and ambient                                  
 concentrations associated with the violations of                       
 the ozone NAAQS in the period 1995-6, and should                       
 be based on likely control measures for reducing                       
 VOC and NO<INF>X emissions.                                                 
Adopted regulations and/or control measures, with   9/1/98              
 enforceable commitments to adopt and implement                         
 the control measures in regulatory form by                             
 specified dates, sufficient to meet reasonable                         
 further progress and attain the 1-hour NAAQS                           
 expeditiously.                                                         
------------------------------------------------------------------------

III. Summary of Public Comments and EPA Response

A. Introduction

    EPA received 127 comments between EPA's notification to the 
Governor on August 21, 1997, and the close of the public comment period 
on February 17, 1998. The docket for this notice includes the public 
comments. Of the comments, 68 supported the redesignation and 59 
opposed the redesignation. In section III.D. below, EPA summarizes and 
responds to each of the substantive comments.

B. Response of the State

    On the day EPA issued its proposed redesignation, EPA received an 
extensive response from the Governor, dated December 10, 1997. This was 
supplemented by a letter dated February 17, 1998, from Peter M. Rooney, 
Secretary for Environmental Protection, California Environmental 
Protection Agency. The Governor's letter was timely, in that it was 
received 7 days before the expiration of the 120-day period for the 
Governor to respond to EPA's notification letter.
    This section provides a general summary of the State's comments, 
expressed in the two letters. EPA's response to the State's comments 
appears in section III.D., which organizes by subject matter all of the 
public comments and EPA's responses.
    The State opposed the redesignation as an inefficient use of 
resources, in view of the forthcoming planning responsibilities to 
address the new, more stringent 8-hour ozone NAAQS.<SUP>4</SUP> The 
State preferred that EPA allow the region to pursue additional emission 
reductions through the air quality maintenance process and through 
implementation of the Bay Area's 1997 Clean Air Plan, rather than force 
the Bay Area to divert resources to an unnecessary planning process 
triggered by redesignation.<SUP>5</SUP> The State noted that EPA had 
followed a similar, flexible approach by not redesignating other areas 
that have violated the ozone standard.
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    \4\ EPA promulgated a revised 8-hour ozone NAAQS on July 18, 
1997 (62 FR 38856).
    \5\ This plan was adopted by the BAAQMD on December 17, 1997, to 
address requirements of the California Clean Air Act, including a 
triennial update to the area's comprehensive strategy for attaining 
the State's air quality standards. The plan was not adopted to 
address Federal CAA requirements and it has not been submitted to 
EPA as a SIP revision.
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    Both letters from the State attached two legal opinions (CARB 
memorandum dated December 8, 1997, from Kathleen Walsh to Michael P. 
Kenny; BAAQMD memorandum dated December 4, 1997, from Robert N. Kwong 
to Ellen Garvey). These legal analyses concluded that, while EPA has 
the authority to redesignate the Bay Area to nonattainment even if the 
Governor does not submit a redesignation request, the Act also gives 
EPA other preferable options. The BAAQMD memorandum discusses 3 
options: federal maintenance plan, SIP call, and Clinton 
Administration's common sense plan. The CARB memorandum argues that EPA 
should issue a call for a revision to the Bay Area's maintenance plan 
under CAA section 110(k)(5) if the Administrator determines that a SIP 
revision is necessary to correct a violation, since this approach would 
allow a more targeted effort to correct the problem. The BAAQMD 
memorandum adds that a maintenance plan is the means Congress 
established for addressing exceedances following redesignation to 
attainment, and both memoranda conclude that the existing maintenance 
plan and the Bay Area's 1997 Clean Air Plan are already at work toward 
returning the District to attainment, as indicated by the absence of 
any exceedances of the 1-hour ozone NAAQS in the Bay Area during 1997.
    The State argued that there is no technical basis for determining a 
specific emission reduction target by EPA's proposed deadline of May 1, 
1998, and that a quasi-technical assessment would not be accepted by 
the public or the business community. The State contended that modeling 
information is outdated and inadequate for purposes of determining an 
emissions reduction target.
    The State argued that redesignation would hurt attainment efforts 
in the Central Valley, since it would distract the Bay Area from 
achieving real

[[Page 37263]]

emissions reductions.<SUP>6</SUP> The Governor stated that he has 
directed the Chairman of CARB to work with involved districts to ensure 
that the BAAQMD develops additional measures to address the needs of 
the Central Valley.
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    \6\ California's Central Valley comprises the Sacramento Valley 
to the northeast of the Bay Area and the San Joaquin Valley to the 
southeast. CARB has concluded that the Sacramento Valley, the San 
Joaquin Valley, and the North Central Coast (to the south of the Bay 
Area) are affected by transport of ozone and ozone precursors from 
the Bay Area.
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    The State concluded that EPA's proposed schedule does not provide 
sufficient time for planning or attainment, and that accomplishment of 
the proposed SIP requirements would be too costly. The State noted that 
the BAAQMD had estimated that EPA's proposed planning process, although 
streamlined, would still cost in the range of one million dollars or 
more, and would require significant investments of staff time, advisory 
committee time, and governing board time for all 3 co-lead agencies. 
The State specifically argued against EPA's proposed requirements for a 
weekend emissions inventory, which would require several person-years 
of effort and associated costs in the range of a half-million dollars. 
As an additional financial burden, the State asserted that EPA's 
proposed redesignation of the Bay Area without a classification 
jeopardizes the region's Congestion Mitigation and Air Quality 
Improvement Program (CMAQ) funding.
    Finally, the State cited the President's directive that accompanied 
the promulgation of the new federal standards for ozone and particulate 
matter.<SUP>7</SUP> The State encouraged EPA to comply with the spirit 
of the directive, which emphasizes that ``implementation of the air 
quality standards is to be carried out to maximize common sense, 
flexibility, and cost effectiveness.'' The State concluded that EPA 
withdrawal of the redesignation proposal would be most consistent with 
this directive.
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    \7\ Memorandum from the President to the Administrator of the 
Environmental Protection Agency, dated July 16, 1997, entitled 
``Implementation of Revised Air Quality Standards for Ozone and 
Particulate Matter,'' and attaching ``Implementation Plan for 
Revised Air Quality Standards.'' 62 FR 38421 (July 18, 1997).
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C. Overview of Public Comments

    EPA's proposed redesignation elicited a very large number of 
comments, offering strong arguments either in support of, or in 
opposition to, redesignation. Many of the letters also provided helpful 
information regarding the impacts, beneficial or adverse, expected to 
result from redesignation. Regardless of whether or not the writer 
favored redesignation, every commenter strongly supported clean air 
progress in the Bay Area. It is notable, for example, that many 
commenters from the Bay Area business community wished to do their part 
to improve air quality and maintain a sound economy, based on their 
conviction that investments in air quality directly enhance the area's 
economic vitality and their employees' quality of life. EPA appreciates 
each comment and greatly values the commenters' commitment to improved 
air quality and public health protection.
    As previously noted, well over 100 individuals or organizations 
submitted comments on the proposed redesignation.
    Included among the comments were letters supporting redesignation 
from Congressman Gary Condit (Fresno) and from 6 Members of Congress 
from the Bay Area (Representatives George Miller, Lynn Woolsey, Nancy 
Pelosi, Pete Stark, Anna Eshoo, and Tom Lantos). Four Northern 
California Members of Congress (Representatives Ellen Tauscher, Tom 
Campbell, Frank Riggs, and Vic Fazio) signed a letter in opposition to 
the redesignation.
    The Bay Area Members of Congress opposing the redesignation 
believed that such an action is neither consistent with the CAA nor in 
the spirit of the President's 1997 directive on implementing the ozone 
and particulate matter NAAQS. These Representatives noted that the CAA 
does not mandate redesignation but allows EPA to recognize the Bay 
Area's track record and overall quality of air. The Members felt that 
redesignation will trigger a costly, duplicative planning process that 
will detract from collaborative efforts to improve air quality and 
prepare for compliance with the 8-hour NAAQS. The Representatives 
indicated that sources informed them that EPA's proposed action would 
provide no new authority, funding and technology. The legislators felt 
that declining Bay Area emissions and the clean 1997 ozone season prove 
that a region can quickly return to attainment without the economic, 
political, and administrative complexities of redesignation. The 
Representatives indicated that they are not opposed to the new 8-hour 
ozone NAAQS but wish an efficient, common sense transition to achieve 
the NAAQS. Finally, if EPA redesignates the Bay Area, the legislators 
wanted assurance that the CMAQ funding for the Bay Area will not be 
jeopardized by EPA's action.
    Congressman Condit fully supported the proposed redesignation and 
referenced scientific data relating to Bay Area's exceedances and to 
the impact of transported pollutants to downwind areas, such as the San 
Joaquin Valley. Congressman Condit asked that a July 14, 1997 petition 
to EPA be incorporated in his comment. This petition was signed by 4 
Congressmen in addition to Congressman Condit (Representatives George 
Radanovich, Richard Pombo, John Doolittle, and Sam Farr), 4 state 
legislators, local elected officials, and officials representing farm 
and manufacturing organizations, environmental groups, and the San 
Joaquin Valley Unified Air Pollution Control District.
    The petition summarizes the adverse impacts of elevated ozone 
levels on public health, health care costs, and crops. The petition 
also notes reasons why the years during the early 1990's when the Bay 
Area recorded no violations were exceptional: A severe drought limited 
biogenic emissions, summer peak temperatures were lower than normal, 
the area was experiencing an economic recession, and the 55 mph speed 
limit was in effect, reducing emissions of ozone precursors from cars 
and trucks.
    The petition notes that no modeling supported the redesignation of 
the Bay Area to attainment, and that contingency measures in the 
maintenance plan yielded no additional air quality benefit, 
particularly in light of EPA's decision to waive certain NO<INF>X</INF> 
control requirements. Thus, the maintenance plan failed to comply with 
the requirement in CAA section 175A(d) that the plan contain 
contingency measures sufficient to assure that the State will promptly 
correct any violation of the standard which occurs after the 
redesignation. The petition adds that it is now apparent that the 
maintenance plan failed to comply with the even more fundamental 
requirement of section 175(A)(a) that such plans contain additional 
measures, if any, as may be necessary to ensure maintenance of the 
NAAQS.
    The petition recounts the Bay Area's ozone NAAQS violations 
immediately following redesignation, some lasting up to 7 hours on 11 
different days, with the worst exceedance in excess of .150 ppm, and 13 
exceedances at or above .140 ppm. The petition concludes that prompt 
action is necessary to achieve the overriding purpose of the Act, since 
the SIP controls have been shown to be insufficient for attainment or 
maintenance.
    The petition asks EPA either to withdraw the redesignation or 
redesignate the Bay Area to nonattainment, and further asks EPA to find 
that the current Bay Area SIP is inadequate and require the State to

[[Page 37264]]

revise the SIP to attain the NAAQS expeditiously.
    The petition states that there is no longer a defensible basis to 
believe that the Bay Area has attained or that the approved maintenance 
plan is still adequate. The petition continues: ``The existing 
attainment designation sends a false signal to the public, the 
regulated community, local agencies and the District itself that ozone 
pollution is no longer a problem. The complacency created by that 
message will hinder rather than help solve the problem within the Bay 
Area and the San Joaquin Valley * * *.''
    The petitioners requested EPA to establish a SIP requirement that 
the State perform a comprehensive analysis of all factors affecting the 
ozone precursor ``carrying capacity'' for maintenance of the NAAQS in 
the Bay Area, and provide accurate estimates of emission reductions 
anticipated to be achieved from additional measures to be included in 
the plan, based upon an updated emissions inventory. While the 
nonattainment SIP is being prepared, a SIP call should allow the State 
1 year to submit a maintenance revision that includes adopted 
additional measures to ensure the earliest practicable attainment and 
maintenance of the ozone NAAQS. The petitioners stated that, ``Given 
history, the submittal should demonstrate the reliability and adequacy 
of those measures convincingly.'' The subsequent SIP offers an 
opportunity to fine tune the maintenance SIP revision and address any 
problems that may surface in implementation.
    The 6 Bay Area Members of Congress supporting the redesignation 
stressed that protecting the health of their constituents is one of 
their highest responsibilities as lawmakers. After careful 
consideration, these Representatives concluded that the specific 
proposed redesignation presented by EPA is the best course of action to 
provide the greatest assurance of improving Bay Area air quality and 
protecting public health, while placing the fewest burdens on the local 
economy, residents, industry and regulators.
    The legislators noted as significant a recent BAAQMD report showing 
a worsening trend in ozone pollution in the 1990s. While acknowledging 
the BAAQMD's new plan for future actions, the Members of Congress 
expressed concern that the plan, adopted to meet California Clean Air 
Act requirements, is inadequate since it contains only proposals, not 
binding commitments, and can be changed at any time. Since the plan is 
not enforceable by EPA or the public, the Representatives were unable 
to verify that the plan would achieve attainment or genuinely improve 
air quality.
    The Representatives' letter went on to stress that there is no way 
to know whether Bay Area actions are sufficient for attainment until 
federal and local regulators have a common understanding of the extent 
of local air pollution problems. These Members of Congress considered 
that EPA's redesignation proposal allows the maximum flexibility to the 
BAAQMD to reach attainment by building on its existing plan and 
avoiding redundancy, specifically with respect to emissions inventory 
and modeling. The Members stated that it is incumbent upon the BAAQMD 
to work with EPA to find common ground on credible and binding actions 
and timetables.
    While aware of arguments against redesignation based on EPA's 
recent adoption of a more stringent 8-hour ozone NAAQS, the Members of 
Congress still favored redesignation and action now to address the 1-
hour standard, since 10 years may pass before the Bay Area must comply 
with the revised ozone standard, and any steps taken to comply with the 
current standard will only help, not hinder, the area's ability to meet 
the 8-hour standard when it is officially in place. In the meantime, 
Bay Area residents are likely to be exposed to harmful pollution levels 
if there is no action.
    Finally, these 6 Representatives noted that the Department of 
Transportation has concluded that EPA's proposed redesignation would 
not jeopardize the Bay Area's eligibility for CMAQ funds under either 
the existing Intermodal Surface Transportation and Efficiency Act 
(ISTEA) or pending revisions to the Act.
    EPA received numerous letters from State legislators, mayors, and 
boards of supervisors, in almost equal number supporting and opposing 
the redesignation. Fifteen city councils or county boards of 
supervisors in the San Joaquin Valley adopted resolutions supporting 
the redesignation and Federal actions to mandate additional controls in 
the Bay Area to reduce pollution levels exported into the Valley.
    Five California air pollution control districts (Monterey, San 
Joaquin, Sacramento, Yolo-Solano, and Placer) wrote to support further 
emission reductions in the Bay Area, while the BAAQMD opposed the 
redesignation. EPA summarizes and responds to the BAAQMD's extensive 
comments in section III.D., below.
    EPA received letters from over 20 Bay Area businesses and business 
organizations arguing against the proposed redesignation, as well as 
several letters from San Joaquin Valley businesses supporting the 
redesignation.
    Letters supporting the redesignation and encouraging adoption of 
specific additional controls were sent by Northern California 
environmental groups. These commenters generally perceived a contrast 
between the major threat to public health reflected in the recent ozone 
violations and the lack of political will shown by State and Bay Area 
officials. The commenters supported a stringent timetable for SIP 
revisions and attainment, agreeing with EPA that the urgent priority is 
to actually adopt measures to ensure that the Bay Area ozone violations 
will not recur.
    Nineteen public interest groups representing the Bay Area 
Environmental Justice Community signed a letter in support of the 
redesignation, emphasizing the need to stem job flight to the suburbs 
and to increase public transit within the Bay Area. The environmental 
justice groups noted that these changes would benefit poor people and 
communities of color both by improving their health and by increasing 
their access to jobs and essential services.
    All letters from downwind areas (including, notably, the San 
Joaquin Valley) strongly urged EPA to finalize the redesignation, on 
the grounds that the Bay Area exports ozone or ozone precursors to 
their region, thus jeopardizing public health, prosperity, and scenic 
and resource values. These letters typically noted that the Bay Area, 
as an attainment area, does not confront Federal control 
responsibilities, and that this double standard unfairly penalizes 
downwind nonattainment areas, which face specific CAA mandates 
associated with their ``serious'' or ``severe'' ozone classifications.
    Letters from Bay Area local officials and businesses generally 
pointed to unusual weather during 1995 and 1996 as the cause of the 
ozone exceedances; the Bay Area's continuing efforts to reduce 
emissions and the BAAQMD's projections that emission levels will 
decline significantly in future years; the fact that the Bay Area 
recorded no exceedances in 1997; and the importance of not diverting 
resources from implementation of existing measures and planning for the 
more protective 8-hour ozone NAAQS. The commenters frequently observed 
that EPA's proposed SIP timetable was too hasty to allow for good 
decision making.

[[Page 37265]]

D. Specific Comments and EPA Response

1. Comments Relating to the Basis of EPA's Proposal to Redesignate the 
Bay Area to Nonattainment
a. Air Quality and Emissions
    Comment: The primary cause of the recent ozone exceedances is the 
very unusual weather patterns of 1995 and 1996. There were fewer 
exceedances of the 1-hour ozone NAAQS in 1996 and no exceedances in 
1997. The Bay Area should therefore continue to be considered an 
attainment area.
    Response: The Bay Area is not in compliance with the federal ozone 
standard, a standard that was designed to protect public health. The 
absence of violations in 1997 is a positive sign, but compliance with 
the federal ozone standard is measured over a 3-year period, not on an 
annual basis. The primary reason for the 3-year time frame is to 
account for the effects of weather and other meteorological conditions 
that can work to either the advantage or disadvantage of air quality. 
This is particularly relevant in the Bay Area's case, since the 
meteorological conditions prevailing on the West Coast during 1997 were 
unusually favorable to good air quality. Furthermore, according to a 
recent technical analysis by the BAAQMD, the ozone-conducive 
meteorology that occurred in 1995 and 1996 is likely to recur (BAAQMD 
Evaluation of the 1995 and 1996 Ozone Seasons in the San Francisco Bay 
Area, October 1997, attached to Governor Wilson's December 10, 1997 
letter to EPA Administrator Browner). Bay Area residents must be 
assured of clean air under all weather conditions.
    The Bay Area recorded 17 violations of the 1-hour standard over the 
3-year period 1994-1996. During that period, exceedances of the ozone 
standard were measured at 15 official network monitoring locations 
throughout the Bay Area. Although air quality improved between 1995 and 
1996, the Bay Area's ranking in 1996 was the 6th worst in the nation 
for number of days when ozone levels exceeded the federal standard. 
Over the period 1995-1997, the Bay Area recorded 15 violations and had 
significantly worse air quality than most other metropolitan areas 
designated as nonattainment for ozone (see response to the following 
comment). Many of these areas are classified as ``serious'' or higher 
under the Clean Air Act, and are subject to specific mandatory 
requirements which would not apply to the Bay Area in EPA's 
redesignation proposal.
    These high ozone levels are harmful to public health in the Bay 
Area. Exposure to ambient ozone concentrations, even at relatively low 
levels and for brief periods of time, can cause respiratory symptoms 
such as a reduction in lung function, chest pain, and cough. Repeated 
exposure can make people more susceptible to respiratory infection and 
lung inflammation, and can aggravate preexisting respiratory diseases 
such as asthma. In consideration of these significant public health 
concerns associated with the Bay Area's elevated ozone levels, EPA 
continues to believe that redesignation to nonattainment is warranted.
    Comment: The Bay Area has the cleanest air of any metropolitan 
region in the nation. Since 1990, the Bay Area has been in attainment 
99.995% of the time.
    Response: There is no question that air quality in the Bay Area has 
improved over the last 40 years. However, the Bay Area is not currently 
attaining the federal 1-hour ozone standard, a standard that was 
designed to protect public health and which has been made more 
protective by adoption of a new, 8-hour standard. The magnitude of the 
problem is significant as demonstrated by the number of violations (17 
since redesignation to attainment in 1995) and the number of days when 
the standard was exceeded (19 days between 1995-1997). When comparing 
air quality in the Bay Area to other major metropolitan areas, there 
are a number of large metropolitan areas, such as Chicago and Detroit, 
with fewer violations and exceedance days than experienced in the Bay 
Area. Furthermore, the Bay Area ranks among the worst of the 243 Air 
Quality Control Regions in the country, based on data from the most 
recent 3-year period. Finally, in contrast to most areas of the 
Country, there is not a significant downward trend in the number of 
ozone exceedances in the Bay Area since 1989.
    Comment: EPA's reliance on a statistic ranking the Bay Area the 6th 
worst in the nation in number of days over the ozone standard is 
misplaced. EPA's simplistic characterization of the number of 
exceedances fails to realistically depict the situation. A more 
realistic characterization is based on a review of the exceedances in 
terms of hours over the standard relative to hours in the ozone season 
for six or seven years. Following this approach, the number of hours 
over the standard is less than \2/100\ of a percent for 1990-1996. This 
analysis properly focuses on long-term trends rather than short-term 
data.
    Response: When EPA establishes an ambient air quality standard, it 
sets not only the level of the standard (in this case, .12 ppm) but 
also the averaging time of the standard (1-hour) and the form of the 
standard (how compliance is measured). Each of these components of the 
NAAQS is set based on EPA's review of the available health effects 
data. When EPA set the 1-hour ozone NAAQS, EPA specified that the form 
be based on the number of exceedance days per year averaged over 3 
years. Therefore, EPA's characterization of the Bay Area air quality in 
terms of number of days over the standard is appropriate. The form of 
the standard is not based on the number of hours over the standard 
relative to hours in the ozone season for 6 or 7 years, so an 
examination of the Bay Area's air quality on this basis would not be 
appropriate.
    Comment: Some commenters concluded that the absence of violations 
in 1997, in conjunction with predicted further declines in emissions, 
proves that the Bay Area's ozone problem has been solved. Other 
commenters noted that the West Coast's extraordinary meteorology in 
1997 kept ozone concentrations unusually low, and that emissions in the 
Bay Area may in fact not be decreasing as much as predicted, given the 
strong economic growth in the area and other factors.
    Response: The October 1997 BAAQMD report referenced above 
identifies a downtrend in ozone precursor emissions from 1979 through 
the early 1990s, but notes that during the 1990s ``progress appears to 
have lapsed; there appears to have been an increase in ozone potential, 
after accounting for meteorology'' (page v). The report further notes 
that the ozone violations in 1995 and 1996 cannot be attributed solely 
to unusual circumstances. It identifies possible explanations for 
increased emissions over this time period (e.g., increased speed 
limits, increased congestion levels, and increased employment levels in 
East Bay communities).
    EPA believes that a redesignation to nonattainment not only 
accurately describes air quality in the Bay Area, but also provides an 
opportunity for reevaluating the causes of the Bay Area's ozone 
violations, the quantity of emission reductions needed to attain the 
health-based standard, and the measures that will achieve those 
reductions expeditiously. This may involve not only CARB and BAAQMD but 
also MTC and ABAG in cooperative efforts to reduce the motor vehicle 
contribution to the Bay Area's continuing smog problem.

[[Page 37266]]

    Comment: EPA has not demonstrated that contingency measures in the 
Bay Area's maintenance plan in conjunction with other projected 
reductions will fail to bring the region back into attainment.
    Response: EPA acknowledges that additional emission reductions are 
likely to be achieved from measures already in the SIP or submitted for 
SIP approval. No commenter, however, has provided any evidence that 
these reductions will be sufficient to avoid violations in the future. 
Indeed, many commenters, including the BAAQMD and the State, emphasized 
that recently adopted control measure commitments in the Bay Area's 
1997 Clean Air Plan are important in order to ensure continued air 
quality progress.
    The Clean Air Act places the burden on the State to demonstrate 
that its plan, at all times, provides for attainment and maintenance of 
the NAAQS, through federally enforceable emission reductions sufficient 
to avoid violations of the NAAQS. The Federal CAA also provides 
protections to the public in the event that State plans are not fully 
and successfully implemented to achieve the scheduled emission 
reductions and air quality improvements. These protections include 
federally imposed nonimplementation sanctions and opportunities for 
citizens to sue to compel implementation.
    EPA believes, therefore, that redesignation and new SIP obligations 
for the Bay Area are consistent with the overall structure and intent 
of the CAA, and provide key public health benefits. The State and 
BAAQMD will assess, using available data and technical analyses, the 
amount of emission reductions needed to ensure that violations of the 
1-hour ozone NAAQS do not recur. The State, BAAQMD, and other 
responsible local agencies must then identify control measures that 
will achieve these reductions. EPA expects that the agencies will 
analyze which control measures from the 1997 Clean Air Plan are needed 
to attain the standard and which measures beyond those contained in the 
plan are also needed. The State, BAAQMD, and other responsible agencies 
will be subject to a schedule for adopting and implementing the 
necessary controls. The public will have increased protections as a 
result of making control measures needed to attain the standard part of 
the SIP, thus providing insurance that the measures will be carried 
out, if necessary, through federal enforcement or citizen suit.
    Comment: EPA received a number of comments related to the continued 
applicability of the 1-hour ozone NAAQS in light of the new 8-hour 
standard.
    Response: EPA is responding to these comments at length below to 
further the public's understanding of this issue. However, EPA's 
decisions that (1) the 1-hour standard will remain in effect in an area 
until it is attained, and (2) that the standard continues to apply in 
the Bay Area because the area is not attaining the standard, are not at 
issue in this rulemaking action and are not appropriately challenged 
here. EPA's views regarding these issues are set forth in 63 FR 31013, 
June 5, 1998.
    Comment: The Bay Area had attained the 1-hour ozone NAAQS and, 
therefore, rather than being redesignated to nonattainment, the area 
was entitled to revocation of the 1-hour NAAQS in conformance with the 
President's directive.
    Response: The President's ``Implementation Plan for Revised Air 
Quality Standards'' (``Implementation Plan'') (62 FR 38424) called for 
EPA to revoke the 1-hour ozone NAAQS in all areas that attain the 
standard. The President did not direct EPA to revoke the 1-hour ozone 
standard in all areas currently designated as maintenance or attainment 
areas. The President clearly intended that current air quality be the 
basis of EPA's determination of which areas attain. The Implementation 
Plan states that ``[f]or areas where the air quality does not currently 
attain the 1-hour standard, the 1-hour standard will continue in 
effect'' (emphasis added). Moreover, the controlling regulatory 
provision, 40 CFR section 50.9(b), specifies that an area must have air 
quality that meets the standard at the time of the decision. EPA's 
rulemaking action to determine that the 1-hour standard no longer 
applies in areas that are not currently violating the standard is 
therefore consistent with the Presidential memorandum. 63 FR 31013 
(June 5, 1998). Because the Bay Area is currently violating the 1-hour 
ozone standard, the area is not currently eligible for this 
determination.
    Comment: EPA has indicated that if the Agency's review of recent 
monitoring data finds that an attainment or maintenance area now 
violates the 1-hour standard, EPA will not redesignate these areas to 
nonattainment under the 1-hour standard.
    Response: Both EPA's final regulation promulgating the new ozone 
regulation (62 FR 38873) and the Presidential memorandum regarding 
implementation of the standards (62 FR 38424) explain that in order to 
ensure a smooth transition to the implementation of the 8-hour ozone 
standard, the 1-hour standard will remain applicable to an area until 
it has attained the 1-hour standard. As long as the 1-hour standard 
remains in effect in an area, so does EPA's authority under CAA section 
107(d)(3) to redesignate that area as a nonattainment area. EPA's 
``Guidance for Implementing the 1-Hour Ozone and Pre-Existing 
PM<INF>10</INF> NAAQS'' (December 29, 1997 Memorandum from Richard D. 
Wilson, to EPA Regional Administrators) clarifies that ``in certain 
cases where air quality data through 1997 show nonattainment, EPA may 
be redesignating areas from attainment to nonattainment for the 1-hour 
standard.''
    Comment: EPA should treat the Bay Area like other maintenance areas 
in the Country, where the 1-hour NAAQS is not being revoked because the 
areas have had recent violations of the NAAQS. These areas are not 
being reclassified to nonattainment.
    Response: The Bay Area's number of exceedances and violations and 
the Bay Area's peak concentrations (highest monitored value and design 
concentration) far exceed those in all other maintenance areas that 
have had exceedances since 1994. There are 5 other ozone maintenance 
areas in addition to the Bay Area that have experienced violations of 
the 1-hour ozone standard after redesignation: Kansas City, Detroit-Ann 
Arbor, Dayton-Springfield, Grand Rapids and Memphis. Three of these 
maintenance areas (Detroit-Ann Arbor, Grand Rapids, and Dayton-
Springfield) already meet the test for attainment of the 1-hour ozone 
NAAQS based on 1995-1997 data and are therefore proposed for revocation 
of the 1-hour ozone standard (63 FR 27247, May 18, 1998). The remaining 
2 areas, Kansas City and Memphis, could meet that test at the end of 
1998, assuming that no more than 2 exceedances are recorded at the peak 
monitor during 1998. Because the peak monitor in the Bay Area recorded 
8 exceedances in 1996, the Bay Area would still violate the 1-hour 
ozone NAAQS even if no exceedances occur in 1998, since the average 
number of exceedances for the 3-year period 1996-1998 would exceed 1 
per year.
b. Legal Authority
(i) General Comments on Mandatory and Discretionary Authorities To 
Redesignate
    Comment: A number of commenters felt that EPA should not 
redesignate the Bay Area to nonattainment because the Clean Air Act 
contains no mandatory duty to do so.
    Response: EPA agrees that section 107(d)(3)(A) does not require EPA 
to redesignate the Bay Area. However,

[[Page 37267]]

section 107(d)(3) of the Act grants the Administrator broad discretion 
to redesignate areas when she determines that it is appropriate. For 
the reasons discussed at length in the proposal and in today's final 
notice, the Administrator believes that it is necessary to redesignate 
the Bay Area.
(ii) Authority To Redesignate Without Classification
    Comment: The BAAQMD commented that it disagrees with EPA's 
interpretation of section 181(b)(1) of the Act, and believes that the 
ambiguity contained in the language of this section argues in favor of 
a SIP call to strengthen the maintenance plan, rather than 
redesignation without classification.
    Response: As EPA explained at length in its proposal, section 
181(b)(1), which provides for new designations to nonattainment, does 
not on its face apply to the Bay Area. (Please refer to 62 FR 66580, 
December 19, 1997, for EPA's analysis of the applicability of section 
181.) Section 181(b)(1) explicitly sets forth which areas it governs. 
Specifically, section 181(b)(1) covers only those areas that were 
originally designated attainment or unclassifiable pursuant to section 
107(d)(4) of the 1990 amendments. This section is silent with regard to 
areas, like the Bay Area, that were designated nonattainment under the 
1990 amendments, redesignated to attainment, and that subsequently 
returned to nonattainment.
    In its comments on the proposal, the BAAQMD cautions EPA against 
inferring anything from Congress' silence with regard to areas like the 
Bay Area. However, because Congress was silent on this point, some 
inference must be made in order to decide how an area like the Bay Area 
is to be treated under the Act. The BAAQMD would like us to infer that 
we cannot redesignate an area back to nonattainment once it has 
attained the standard, but must instead issue a SIP call to address the 
inadequacies in the maintenance plan and contingency measures. While a 
SIP call is one possible option, it is clearly not the only option 
authorized by the Act. There is no ambiguity in the language of section 
107(d)(3), which grants the Administrator the authority to redesignate 
an area ``any time'' she deems it is appropriate based on air quality 
data, planning and control considerations, or any other air quality-
related considerations.<SUP>8</SUP> EPA continues to believe that 
redesignation, rather than a SIP call, is the appropriate action in 
this instance. Given the broad discretion granted the Administrator 
under section 107(d)(3), EPA is exercising that discretion today to 
redesignate the area to nonattainment. Moreover, we also continue to 
believe that the ambiguity contained in the language of section 
181(b)(1) is best interpreted as placing the Bay Area under subpart 1 
of the Act for the following reasons. The plain language of section 
181(b)(1) applies only to areas designated attainment under section 
107(d)(4) and excludes areas like the Bay Area. Second, as an area that 
was previously designated nonattainment, the Bay Area has already done 
much of the work required for a nonattainment area SIP and should not 
need the lengthy time period granted to new nonattainment areas to 
complete its planning process. The Bay Area has already implemented the 
section 181 requirements applicable to its previous moderate 
classification. Finally, sections 172(a)(1) and (2) contain express 
statements that they do not apply to nonattainment areas that are 
specifically covered by other provisions of Part D of the Act, thereby 
demonstrating that the Act contemplates that some areas will fall under 
subpart 1, rather than subpart 2.
---------------------------------------------------------------------------

    \8\ The Bay Area recorded 43 exceedances of the ozone standard 
in the two-year period 1995-1996. The standard allows no more than 
three exceedances at any one monitor over three years. In addition, 
the area recorded violations at special purpose monitors (SPMs) from 
1992-1993, prior to being redesignated to attainment. While these 
violations were not considered in EPA's original decision to 
redesignate the area to attainment because the monitors were not 
part of the official monitoring network, the Agency has since issued 
a policy that requires that any reliable monitoring data be relied 
upon in such decisions. (August 22, 1997 memorandum entitled, 
``Agency Policy on the Use of Special Purpose Monitoring Data,'' 
from John Seitz, Director of the Office of Air Quality Planning and 
Standards.) As we noted in the proposal (62 FR 66579, December 19, 
1997), EPA has determined that the SPMs data should have been 
considered in the 1995 redesignation action. With the advantage of 
hindsight, these violations can be viewed as an indicator that the 
air quality problem in the Bay Area has not been solved at the time 
the area was redesignated, as was borne out by the high number of 
exceedances during 1995-1996. As we have discussed at length herein 
and in the notice of proposed rulemaking, the severity of the air 
quality problem makes redesignation the appropriate action in this 
case.
---------------------------------------------------------------------------

c. Policy Issues
(i) Public Notification and Public Perception
    Comment: Some commenters considered redesignation to be simply a 
labeling exercise that will have a negative impact on public support 
for existing air quality programs by emphasizing redundant and 
counterproductive procedural and paperwork tasks above real progress in 
emission reductions.
    Other commenters noted that the redesignation debate in the Bay 
Area shows that labels are significant, and that ``nonattainment'' 
accurately conveys the message that making the Bay Area's air safe to 
breathe is a task still unfinished; there needs to be a clear and 
consistent signal to the affected sources and the public about why new 
measures are necessary. These commenters concluded that, to win 
approval of additional reductions in air pollution, the public needs to 
know the actual status of air quality in the Bay Area. The broader 
public will not support efforts to reduce pollution if air quality is 
deemed to be in attainment of health standards. If local regulators 
maintain that air quality is fine and if there is no public 
accountability through EPA oversight or the right of public interest 
groups to enforce attainment plans, the regulators will not take on the 
difficult task of requiring polluters to invest further in pollution 
prevention or control technology.
    Response: The large number of Bay Area exceedances in 1995 and 1996 
indicates that we do not have a convincing basis for predicting an end 
to ozone violations without further reductions. Designations of 
attainment are intended to apply to areas that have demonstrated clean 
air over a 3-year period.
    Moreover, EPA does not believe that the Bay Area's current 
attainment designation is appropriate since it tells the affected 
public, the regulated community, local agencies, and the District that 
ozone pollution is no longer a problem. This inaccurate message tends 
to undercut collaborative and progressive actions in the near term, and 
contributes to confusion and dissension both within the Bay Area and in 
downwind populations.
    EPA remains convinced that near-term action is needed to protect 
the health and welfare of the State's residents. Emission reduction 
strategies will be evaluated and put in place 4-5 years sooner through 
a redesignation under the 1-hour standard than is expected under a plan 
to meet the revised ozone standard (new plans are not expected to be 
due under the revised standard until 2003 and the attainment date for 
an area such as the Bay Area for the 8-hour standard is expected to be 
2005 at the earliest). That is at least 4-5 years during which 
Californians would be breathing dirtier air than they should be.
    Finally, EPA continues to believe that a redesignation to 
nonattainment not only accurately describes air quality in the Bay Area 
but also provides an opportunity for reevaluating the causes

[[Page 37268]]

of the Bay Area's ozone violations, the quantity of emission reductions 
needed to attain the health-based standard, and the measures that will 
achieve those reductions expeditiously.
(ii) Impact of Bay Area Emissions on Downwind Nonattainment Areas and 
Issues of Equity
    Comment: Commenters from downwind areas and environmental groups 
referenced a CARB study indicating that pollution transported from the 
Bay Area produces up to 27% of the smog in the Central Valley. Monterey 
Bay Unified Air Pollution Control District noted that CARB has found 
that half of the exceedances of the State 1-hour ozone standard in the 
North Central Coast Air Basin result from overwhelming transport from 
the Bay Area (i.e., the exceedances would have occurred even in the 
absence of local emissions). Commenters expressed the belief that 
continued Bay Area progress toward meeting federal requirements is key 
to achieving air quality in these downwind areas, and that further 
NO<INF>X</INF> reductions in the Bay Area are especially important. 
Commenters noted high pollution levels in areas downwind of the Bay 
Area, and argued that redesignation would help ensure that the Bay Area 
pays the price of controlling its pollution rather than passing it on 
in the form of health impacts and added regulatory requirements for 
downwind areas. Downwind areas stated that enhanced motor vehicle 
inspection and maintenance (or enhanced I/M, which is known in 
California as Smog Check 2) should be required in the Bay Area, just as 
it is in urbanized portions of the Central Valley.
    The BAAQMD argued that redesignation without classification would 
not ensure implementation of Smog Check 2 in the Bay Area under 
existing State law. The State argued that redesignation would hurt 
attainment efforts in the Central Valley, since it would distract the 
Bay Area from achieving real emissions reductions. Bay Area industry 
commented that redesignation will not solve pollution transport issues 
in California and that any reliance on pollutant transport concerns to 
support redesignation is unfounded and legally impermissible.
    Response: The basis for the nonattainment designation is the large 
number of recent violations of the 1-hour ozone NAAQS in the Bay Area, 
not any new evidence regarding the impact of Bay Area pollution on 
downwind areas within the State. EPA believes that primary 
responsibility for addressing transport to and from the Bay Area 
resides with the State.
    With respect to the importance of Smog Check 2 in the Bay Area, EPA 
strongly endorses enhanced I/M as one of the most cost-effective 
measures that could be added to the Bay Area's existing controls, since 
the program has the potential to achieve substantial emissions 
reductions in the near term and to ensure that the benefits of 
California's stringent motor vehicle standards are not diminished 
because of poorly maintained vehicles.
(iii) Effect of Redesignation on Limited Air Pollution Control 
Resources
    Comment: Redesignation will trigger an expensive, duplicative 
planning process that will detract from effective collaborative efforts 
to improve air quality. Redesignation provides no new funds, authority, 
or technology but simply imposes paperwork and process requirements.
    Response: Redesignation should not result in a burdensome and 
duplicative planning effort. EPA wants the District and its co-lead 
agencies to focus on emission reductions, not paperwork.
    EPA is asking, in fact, for only three plan elements: the existing 
1995 emissions inventory for VOC and NO<INF>X</INF>, an assessment of 
emissions reductions needed to attain the federal standard, and control 
measures to achieve those reductions. EPA is allowing the District to 
use available data and technical analyses to establish the emission 
reduction targets. Finally, EPA expects that most of the work to 
identify potential control measures has also been completed for the 
District's recently adopted 1997 Clean Air Plan. EPA expects that the 
District will analyze which control measures from this plan are needed 
to attain the standard and which measures beyond those contained in the 
plan are also needed. Making these control measures federally 
enforceable elements of the SIP provides an important public safeguard 
since only in this way can EPA and the public ensure that the 
commitments in the plan are fully implemented and the plan's promised 
air quality benefits are realized. This streamlined planning effort 
also provides an opportunity for the Bay Area to quickly determine 
whether additional reductions from transportation sources are 
appropriate, in the event that attainment requires more near-term 
reductions than the Clean Air Plan currently identifies.
    While EPA concedes that redesignation may provide no new funds, 
authority, or technology, the Agency does not agree that the 
redesignation, as finalized in this action, simply imposes burdensome 
paperwork and process requirements on the Bay Area. EPA's proposed 
streamlined and flexible set of requirements contrasts with extensive 
and prescriptive planning and control requirements that apply to ozone 
nonattainment areas with 1999 attainment deadlines. Most of these 
areas, which were classified as ``serious'' under the Clean Air Act, 
have far fewer ozone exceedances and far fewer planning resources than 
does the Bay Area. The following are examples of ``serious'' ozone 
nonattainment area mandates, which EPA does not propose to require in 
the Bay Area: (1) A more stringent definition of major stationary 
source for purposes of Title V operating permit requirements; (2) more 
stringent applicability thresholds and offset ratios for purposes of 
permitting new and modified stationary sources; (3) a more stringent 
definition of major stationary source for purposes of applying 
reasonably available control technology requirements to existing 
stationary sources; (4) specific, detailed plan elements addressing 
rate-of-progress; (5) an enhanced vehicle inspection and maintenance 
program; and (6) specific, detailed provisions relating to 
transportation control.
    Comment: Redesignation is inconsistent with the President's 
directive that the new federal air quality standards be implemented in 
a flexible, cost-effective and common-sense manner; that EPA respect 
agreements already made by States, communities, and businesses to clean 
up the air; and that EPA implement the standards with the minimum 
amount of paperwork necessary. Redesignation also fails to promote the 
ideals of the President's and Vice President's reinvention report which 
calls for the building of partnerships, the reduction of red tape, and 
the use of sound science to set priorities.
    Response: A key component of the President's implementation plan 
for the new federal air quality standards is that continued progress 
toward meeting the 1-hour standard will ensure a smooth and effective 
transition to the 8-hour standard. EPA's action to redesignate the Bay 
Area as a nonattainment area for the 1-hour ozone standard and the 
simplified set of planning objectives that accompany this action are 
consistent with continuing progress towards meeting the 1-hour 
standard. They are also consistent with other elements of the 
implementation plan pertaining to respecting existing agreements, 
reducing paperwork, and maximizing common sense flexibility, and cost-
effectiveness. As discussed above, EPA is asking for only 3 plan

[[Page 37269]]

elements: the existing 1995 emissions inventory for VOC and 
NO<INF>X</INF>, an assessment of emissions reductions needed to attain 
the federal standard, and control measures to achieve those reductions, 
without requiring expensive new modeling or unnecessary paperwork. The 
District has already identified additional control measures in its 1997 
California Clean Air Act plan that could be used for a new federal 
plan. In addition, partnerships between the private sector, 
environmental groups, and regulators to promote innovative methods for 
addressing the air quality problem could be an important part of the 
Bay Area's response to the redesignation.
(iv) Alternatives to Redesignation
    Comment: EPA should allow the Bay Area to implement and supplement, 
if necessary, the contingency measures in the Bay Area's Maintenance 
Plan, as the remedy to violations. The CAA recognizes that attainment 
areas will experience violations from time to time and that contingency 
provisions should be adequate to cure the problem. If EPA determines 
that the existing Bay Area Maintenance Plan is inadequate, the CAA 
provides a remedy: EPA may issue a SIP call under section 110(k)(5) to 
strengthen the maintenance plan.
    Response: EPA hoped and expected that the Bay Area's maintenance 
plan would be the means to prevent future exceedances of the ozone 
standard. Unfortunately, almost all of the emission reductions from the 
Bay Area's maintenance and contingency measures were in effect at the 
time that the Bay Area experienced so many violations of the ozone 
standard in 1995 and 1996. After completing a stakeholder process over 
the past several years, EPA concluded that additional public health 
protections are needed beyond current Bay Area plans. EPA evaluated all 
of the options available under the Clean Air Act to address the public 
health problem and continues to believe that redesignation is the most 
direct and sensible outcome.
    The proposal that EPA rely only on a ``SIP Call'' would apparently 
involve EPA using the authority of CAA section 110(k)(5) to mandate 
submission of a strengthened maintenance plan. For the reasons 
discussed above, EPA believes that redesignation to nonattainment is a 
more appropriate course under the framework of the Act. While EPA 
considered the ``SIP Call'' option, the Agency concluded that a federal 
nonattainment designation for the Bay Area was important to provide the 
public with accurate information and the correct message: Pollution 
levels must be reduced quickly in order to eliminate unhealthy air 
quality within the Bay Area. Since the amount of reductions necessary 
to attain the federal 1-hour ozone standard has not yet been 
established, EPA believes that the proper SIP remedy is twofold. First, 
the BAAQMD must submit its existing 1995 emissions inventory for VOC 
and NO<INF>X</INF> and an assessment, using available data and 
technical analyses, of the emissions reductions needed to attain the 
standard. Second, the BAAQMD and its co-lead agencies must identify, 
adopt, and submit for incorporation in the SIP all of those control 
measures that are needed to meet the reduction target expeditiously. 
EPA proposed and is now finalizing this simplified SIP remedy, which 
does not substantively differ from the planning requirements that would 
need to be addressed by the State in revising the Bay Area's 
maintenance plan so that it provides for attainment.
    Comment: The BAAQMD commented that if redesignation is finalized 
EPA should classify the Bay Area as a ``marginal'' ozone nonattainment 
area, subject to the requirements specifically delineated in CAA 
section 182(a). This certainty would provide a more specific and 
defensible foundation for the responsibilities of the co-lead agencies, 
CARB, and EPA. The BAAQMD expressed the belief that areas designated as 
``marginal'' would have 3 years to develop a SIP submittal and 5 years 
to reach attainment. Other commenters recommended a ``moderate'' 
classification as more appropriate to the Bay Area's air quality.
    Response: As discussed above and in the proposal, EPA concluded 
that subpart 2 of the Clean Air Act (which includes the ozone 
classifications and specific requirements for each classification) 
applies, on its face, only to: (1) Areas designated nonattainment under 
107(d)(4) at the time the 1990 amendments were passed, and (2) areas 
designated nonattainment under 107(d)(3) for the first time after 
passage of the 1990 amendments. See CAA 181(b)(1). Thus, the subpart 2 
provisions would not seem to apply to the Bay Area, which was initially 
nonattainment, redesignated to attainment, and then redesignated back 
to nonattainment.
    In the proposed redesignation (62 FR 66580), EPA also presented two 
policy reasons for not classifying the Bay Area or requiring the 
District to meet all of the subpart 2 requirements for a ``moderate'' 
ozone nonattainment area:
    (1) Many of the classification requirements served no purpose for 
the Bay Area, because the requirements had already been addressed 
previously when the area was nonattainment or because the requirements 
would contribute no specific emission reductions. For example, 
``moderate'' area requirements include the gasoline vapor recovery 
program (which has been approved as part of the Bay Area SIP for many 
years) and the rate-of-progress plan (which would be superfluous given 
the compressed attainment schedule for the Bay Area). EPA's proposal 
stressed the Agency's determination to eliminate paperwork and focus 
the Bay Area's energies on achieving the emission reductions needed to 
attain the 1-hour NAAQS quickly.
    (2) It did not seem appropriate to allow the Bay Area as much time 
as subpart 2 gives to newly designated and classified nonattainment 
areas. The CAA allows newly designated nonattainment areas the same 
amount of time to meet subpart 2 requirements as was given to areas 
initially nonattainment under the 1990 CAA amendments. This would mean 
that the Bay Area would have either 3 years or 4 years from the 
effective date of the final designation to make a ``moderate'' SIP 
submittal, depending upon whether sophisticated photochemical modeling 
was employed (approximately 6/2001 or 6/2002, instead of the 6/1999 
date for SIP submittal set in this action). The Bay Area would also 
have 6 years to attain the 1-hour ozone NAAQS (2004, instead of the 
2000 date in this action).
    The same analysis applies to an even greater extent with respect to 
a ``marginal'' classification. The Bay Area has previously addressed 
the CAA ``marginal'' area requirements for corrections to RACT rules, 
NSR rules, basic I/M, and rules requiring sources to report on their 
emissions. If EPA were to classify the area as ``marginal,'' in fact, 
the Bay Area would only need to submit a single new SIP element--an 
updated emissions inventory--which would not be due until 2 years from 
the effective date of the final designation (approximately 6/2000, 
instead of the 11/1998 informal submittal date agreed to by the BAAQMD, 
and the 6/1999 SIP deadline set in this action). The CAA does not 
require ``marginal'' areas to submit attainment assessments, but sets 
an attainment deadline 3 years after the effective date of the 
nonattainment designation (i.e., 2001).
    EPA does not believe that either the ``moderate'' or ``marginal'' 
classification requirements and schedule represent an efficient, 
common-sense, or adequate response to the urgent public health concerns 
associated with the Bay Area's large number of recent ozone NAAQS

[[Page 37270]]

violations. EPA continues to conclude that the proposed approach of 
redesignation without classification, setting near-term deadlines for 
SIP revision and attainment, is not only better supported by the terms 
of the CAA but also better fits the goals of this action: To provide 
the Act's clean air protections to Bay Area residents as quickly as 
possible, with minimal process and paper, and with the greatest 
flexibility afforded to the State and local agencies.
    Comment: The BAAQMD proposed that, in lieu of redesignation, the 
BAAQMD, EPA, CARB, the Metropolitan Transportation Commission, the 
Association of Bay Area Governments, the San Joaquin Valley Unified Air 
Pollution Control District, CBE, Earth Justice, and the Sierra Club 
could enter into a binding memorandum of understanding or agreement 
that would result in additional stationary and mobile source control 
measures, with their concomitant emission reductions, being added to 
the BAAQMD's Maintenance Plan or SIP. The BAAQMD argued that this 
approach was supported by the President's emphasis on regulatory 
flexibility.
    Response: EPA strongly supports collaborative efforts between all 
involved parties, and particularly encourages consultation with 
downwind air districts and environmental groups. EPA does not view 
broad cooperative efforts such as the BAAQMD proposes as incompatible 
with redesignation to nonattainment, and notes that half of the parties 
named by the BAAQMD support EPA's proposed redesignation action. EPA is 
unclear, however, regarding the scope of the BAAQMD's proposed binding 
MOU or MOA, whether all of the parties would have the authority to 
enter into a binding MOU or MOA, and whether all necessary parties 
would be bound. There are significant statutory constraints, for 
example, on EPA's authority to enter into binding agreements. 
Nevertheless, EPA would be pleased to participate in any process 
established by the BAAQMD.
    Comment: EPA should follow the Clinton Administration's ``Common 
Sense'' option, and allow the Bay Area simply to focus on the 8-hour 
ozone standard on the schedule established for new ozone SIPs.
    Response: This option apparently involves no near-term actions by 
State and local Bay Area agencies, since most substantive requirements 
and deadlines for SIPs addressing the 8-hour ozone NAAQS will not come 
due for approximately 5 years. The commenter appears to conclude that 
we should abandon efforts to reach a less stringent ozone standard on 
our way to achieving a more stringent ozone standard.
    EPA's final promulgation of the revised 8-hour ozone NAAQS and 
final interim implementation policy, ``Guidance for Implementing the 1-
Hour Ozone and Pre-Existing PM10 NAAQS'' (December 29, 1997), responded 
to commenters on the proposals, who argued that abandonment of SIP 
obligations to provide attainment plans for the 1-hour ozone NAAQS 
would be inconsistent with national public health goals, in view of the 
fact that new plans addressing the 8-hour ozone NAAQS will not be due 
until mid-2003. In order to ensure that momentum is maintained by state 
and local agencies, the final policy provides that the 1-hour standard 
and applicable Clean Air Act requirements will continue to apply to an 
area until EPA makes a determination that the area has met the 1-hour 
standard. As discussed elsewhere in response to comments, EPA believes 
that a compressed and streamlined planning process is necessary for the 
Bay Area to expedite efforts to protect public health. EPA agrees with 
commenters who concluded that this process will benefit rather than 
detract from eventual preparation of a SIP addressing the 8-hour ozone 
NAAQS.
2. Comments Relating to EPA's Proposed SIP Requirements
a. Emissions Inventory
    Comment: While the BAAQMD has been maintaining and updating a 
weekday inventory for many decades, preparing a weekend day inventory, 
as EPA proposes to require, would demand extensive new data gathering 
and compilation, several person-years of effort, and one half-million 
dollars or more. Although assumptions could be made and best-judgment 
factors could be applied to weekday data to generate an estimate of 
weekend day data, the resulting uncertainties would hamper planning 
efforts based on their use. Such an extensive new requirement would be 
more appropriate for a SIP submittal focused on the new 8-hour NAAQS.
    Response: Based on these comments from the State and the BAAQMD, 
EPA has decided to amend the proposed SIP submittal schedule to delete 
the weekend day emission inventory requirement. Nevertheless, EPA 
encourages BAAQMD and CARB to work together with State and regional 
planning and transportation agencies to assess weekend emissions and 
develop appropriate additional control measures as may be necessary and 
appropriate to ensure that weekend violations do not persist.
    Comment: EPA proposed to require an updated carbon monoxide (CO) 
emissions inventory. A commenter noted that, although a CO inventory 
may help shed light on sources of ozone precursors, the CO inventory 
has no direct bearing on ozone attainment status and EPA should delete 
the requirement from the final redesignation.
    Response: In order to minimize still further the scope of the Bay 
Area SIP obligation, EPA agrees to eliminate this requirement. 
Consequently, EPA finalizes in this action a SIP requirement for the 
existing 1995 inventory for VOC and NO<INF>X</INF> emissions only.
b. Attainment Assessment
    Comment: Bay Area industry, the State, and the BAAQMD argued that a 
credible attainment assessment, particularly one that takes into 
account the 1995-6 meteorological conditions and ambient 
concentrations, cannot be performed by May 1, 1998, due to data gaps 
and lack of modeling capability. If the BAAQMD should attempt an 
assessment, it would not be technically defensible and would not be 
accepted by the public or business community. Reliable modeling cannot 
be performed until the results of a new field study (conducted in 1999 
or 2000) are available. Bay Area industry expressed concern that EPA's 
unrealistic schedule may lead the BAAQMD to prematurely ``lock in'' a 
control strategy that emphasizes counterproductive NO<INF>X</INF> 
reductions.
    On the other hand, environmental groups and other commenters felt 
that EPA's proposed schedule struck an appropriate balance between the 
competing concerns for acting quickly and acting knowledgeably. These 
commenters emphasized that the BAAQMD cannot assure compliance with the 
1-hour NAAQS without first knowing what emissions are and what 
reductions are needed, and any extra time and effort spent to 
understand the problem now will pay double dividends in the future, in 
helping the regulatory agencies and affected industry comply with the 
Federal 8-hour NAAQS and the California 1-hour standard.
    Response: EPA continues to believe that available data and 
technical analyses can be used to provide, within a very short period 
of time, a reasonable estimate of emission reductions needed to attain. 
The BAAQMD's October 1997 report, Evaluation of the 1995 and 1996

[[Page 37271]]

Ozone Seasons in the San Francisco Bay Area, recommended such an 
assessment. EPA remains willing to work with the BAAQMD to ensure that 
the exercise can be completed within the established time limits and 
resource constraints, and that the analysis will comply with applicable 
federal requirements. EPA notes that there is no CAA requirement that 
the Bay Area use Urban Airshed Modeling, and that other approaches may 
be appropriate to target the amount of emission reductions needed to 
attain the NAAQS expeditiously. The quality of technical data and 
analyses techniques will continually improve, but it does not make 
sense to wait for the ``perfect'' science to take action. Regulatory 
agencies need to use the best information available now to make 
reasonable decisions about how to protect public health. In order to 
allow more time to assess the reductions needed for attainment, EPA is 
extending the formal SIP submittal deadline for the attainment 
assessment from May 1, 1998 to June 15, 1999. The District has 
committed to submit a draft attainment assessment informally to EPA, 
and make it available to the public, by November 25, 1998. (Letter from 
BAAQMD, ABAG, and MTC dated June 23, 1998.) This early informal 
submittal will allow EPA to review the draft inventory and assessment 
and work with the District to address any deficiencies. Finally, with 
respect to industry's contention that EPA's schedule may lead the 
District to ``lock in'' allegedly counterproductive NO<INF>X</INF> 
controls, EPA does intend to allow CARB and BAAQMD the flexibility to 
select the appropriate mix of ozone precursor controls to ensure 
attainment. This issue is also discussed below in the context of the 
NO<INF>X</INF> waiver.
c. Control Measures
(i) Suggested Measures
    Comment: Several of the commenters recommended particular control 
measures that could be adopted to speed Bay Area attainment. The most 
frequently mentioned new measure was the Smog Check 2 program. 
Sacramento Valley air pollution control districts and environmental 
groups also urged implementation of two additional reduction programs: 
(1) A heavy duty mobile source NO<INF>X</INF> control strategy that 
includes incentives for early introduction of clean engine and fuel 
technologies; and (2) a requirement for permits and controls on smaller 
stationary sources, including natural gas fired boilers and internal 
combustion engines, and regulation of stationary diesel internal 
combustion engines, which are now exempt. The Sierra Club attached to 
their comment an extensive list of control measures for inclusion into 
the SIP, particularly suggestions for specific improvements to the Bay 
Area transportation control measures. CBE provided detailed 
recommendations for a variety of specific additional controls at Bay 
Area refineries and chemical plants. CBE also endorsed a public comment 
on the proposed redesignation from Chesapeake Environmental Group, 
Inc., advocating further reductions in VOC emissions from land fills by 
prohibitions on the use of petroleum-contaminated soil as a landfill 
cover. The Bay Area Environmental Justice Community recommended tough 
rules on oil refining and other polluting manufacturing processes, 
control on the movement of jobs to the outer suburbs, and commitments 
to redirect public funds to transit instead of highway building.
    Response: EPA believes that the suggested control measures merit 
serious attention by the responsible agencies. EPA has forwarded the 
comments to CARB, BAAQMD, MTC and ABAG with encouragements to these 
agencies to consider the suggestions for incorporation into the SIP, as 
appropriate. In order to allow more time for evaluation of additional 
control measures, EPA is extending the SIP submittal deadline for 
adopted regulations or enforceable commitments to adopt regulations, 
from September 1, 1998, to June 15, 1999.
    Comment: The Association of International Automobile Manufacturers, 
Inc., the New United Motor Manufacturing, Inc. (NUMMI), and Toyota 
Motor Manufacturing North America, Inc., commented that the adoption 
and implementation schedule of rules in the Bay Area's 1997 Clean Air 
Plan was coordinated with the implementation schedule of CAA section 
183(e) rules for reducing VOC emissions and the Federal schedule for 
implementation of the maximum achievable control technology (MACT) 
standards for automobiles and light duty trucks. The commenters noted 
that the respective deadlines for these Federal rules are 2003 and 
2000, respectively. The commenters emphasized that any acceleration of 
the BAAQMD's current schedule to meet EPA's proposed 1999 attainment 
deadline would likely result in duplicative efforts and inconsistent 
requirements, and thus increased costs to affected industry.
    Response: EPA has asked the State to perform an assessment of 
reductions needed to attain the 1-hour ozone NAAQS expeditiously, in 
order to prevent recurrence of the violations experienced following the 
redesignation to attainment. EPA wishes the State to use its good 
judgment to determine which new controls should be adopted or expedited 
to meet attainment requirements, assuming that the attainment 
assessment identifies the need for more reductions to prevent 
exceedances by the attainment year 2000. EPA encourages the BAAQMD and 
other responsible agencies to select control approaches that maximize 
common sense and cost effectiveness.
    Comment: Industry commenters questioned whether controls adopted to 
meet the 1-hour ozone NAAQS would necessarily be helpful in meeting the 
new 8-hour ozone NAAQS. Other commenters, however, noted that controls 
adopted to meet the Federal 1-hour ozone standard would contribute to 
eventual attainment of California's more stringent 1-hour ozone 
standard and could be generally presumed to benefit attainment of the 
new 8-hour ozone NAAQS.
    Response: While EPA believes that the great majority of control 
possibilities for meeting the 1-hour ozone NAAQS will also advance 
attainment of the 8-hour ozone NAAQS in the Bay Area, EPA encourages 
CARB, BAAQMD, MTC, and ABAG to assess any new control measures that may 
be considered for expeditious attainment of the 1-hour ozone NAAQS, in 
order to ensure that the measures will also promote attainment of the 
8-hour ozone NAAQS.
    Comment: The BAAQMD proposed that new contingency measures be added 
to the SIP to augment the ones currently implemented. The BAAQMD stated 
that the process for identifying these measures ``can occur quickly 
through consultation among EPA, CARB, and the co-lead agencies. Through 
this process, we can commit our energies and our limited resources to 
pursuing our real shared goal--clean air for all people all the time--
through common sense, flexible, cost-effective, and coordinated 
actions.''
    In its comment letter, the BAAQMD identified the following options 
for supplementing the existing SIP controls:
    (1) already adopted measures which have not been submitted into the 
SIP, such as controls on refinery fugitive emissions and pressure 
relief valves, NO<INF>X</INF> Best Available Retrofit Control 
Technology (BARCT) controls on refineries and utilities, $1 increase in 
bridge tolls;
    (2) measures that the BAAQMD will be pursuing in the near term, 
such as an aqueous solvents rule, new CMAQ-funded projects);

[[Page 37272]]

    (3) State measures, such as further improvements to the I/M 
program.
    Response: EPA shares completely the BAAQMD's goal statement to 
provide ``clean air for all people all the time--through common sense, 
flexible, cost effective, and coordinated actions.'' EPA also 
appreciates the BAAQMD's point that additional control measures can be 
identified quickly through consultation with EPA, CARB, and the co-lead 
agencies; and EPA would be happy to consult on appropriate measures.
    In terms of supplementing the current SIP with additional control 
measures, EPA agrees the example measures are feasible. Depending on 
the outcome of the attainment assessment, however, additional controls 
may be needed. The Bay Area has already identified several feasible 
control measures in response to the State requirement for a 1997 Clean 
Air Plan. Upon review of the Bay Area's 1997 Clean Air Plan, CARB 
suggested a number of modifications to existing Bay Area regulations 
and transportation control measures that could result in additional 
emission reductions (See letter from Lynn Terry, Assistant Executive 
Officer, CARB to Ellen Garvey, Air Pollution Control Officer, BAAQMD, 
dated December 1, 1997.) In addition, EPA's Office of Air Quality 
Planning and Standards identified 42 cost effective control measures 
that may be appropriate for the Bay Area. (E.H. Pechan & Associates, 
Inc., ``Control Measure Analysis of Ozone and PM Alternatives: 
Methodology and Results,'' prepared for Innovative Strategies and 
Economics Group, Office of Air Quality Planning and Standards, U.S. 
EPA, RTP, NC July 17, 1997.) Whatever additional SIP measures are 
pursued, they must provide sufficient emission reductions to ensure 
expeditious attainment of the 1-hour ozone NAAQS in the Bay Area.
(ii) NO<INF>X</INF> Waiver and the Efficacy of NO<INF>X</INF> Controls
    Comment: Industry commenters stated that EPA provided no adequate 
notice of its retroactive revocation of the NO<INF>X</INF> waiver and 
the waiver remains appropriate to avoid requirements for expensive and 
counterproductive NO<INF>X</INF> controls, since modeling evidence 
shows that NO<INF>X</INF> reductions may elevate ozone concentrations 
at locations within the Bay Area under certain meteorological 
conditions, and thus could detract from attaining the ozone NAAQS.
    Earthjustice, on behalf of Sierra Club and CBE, agreed with EPA's 
position that no waiver of NO<INF>X</INF> control requirements now 
applies, but contended that the waiver continued during the maintenance 
period. Earthjustice considered that the waiver expired by its own 
terms, however, because it was explicitly conditional, lasting only as 
long as the area's monitoring data continue to demonstrate attainment. 
Finally, Earthjustice concluded that the Bay Area is therefore now 
subject to CAA section 182 requirements for NO<INF>X</INF> control.
    Response: Section 182(f) of the Act extends the ozone nonattainment 
area VOC requirements of subpart 2 of the Act to emissions of 
NO<INF>X</INF>. This section also provides that the Administrator may, 
either on her own or in response to a petition, waive these subpart 2 
NO<INF>X</INF> requirements if, for nonattainment areas outside an 
ozone transport region, either of 2 tests are met. The section 182(f) 
NO<INF>X</INF> requirements would not apply if the Administrator 
determines that (1) for the sources concerned, net air quality benefits 
are greater in the absence of the NO<INF>X</INF> reductions, or (2) 
additional NO<INF>X</INF> reductions would not contribute to attainment 
of the ozone NAAQS. Additionally, the NO<INF>X</INF> control 
requirements, under the same tests, could be relieved as to any portion 
of the controls that are shown to result in excess emissions 
reductions. On December 16, 1993, EPA issued guidance on obtaining 
NO<INF>X</INF> waivers.<SUP>9</SUP> This guidance was subsequently 
revised on May 27, 1994.<SUP>10</SUP>
---------------------------------------------------------------------------

    \9\ ``Guideline for Determining the Applicability of Nitrogen 
Oxide Requirements under Section 182(f),'' John Seitz, Director, 
Office of Air Quality Planning and Standards.
    \10\ ``Section 182(f) Nitrogen Oxides (No) Exemptions--Revised 
Process and Criteria,'' John Seitz, Director, Office of Air Quality 
Planning and Standards.
---------------------------------------------------------------------------

    At the time the Bay Area submitted its redesignation request, EPA 
guidance governing redesignations required, pursuant to section 107 of 
the Act, that an area must meet all applicable requirements of section 
110 and part D prior to redesignation. Thus, before EPA could 
redesignate the Bay Area to attainment, the Bay Area had to adopt all 
required NO<INF>X</INF> RACT rules. However, based on air quality data 
from official SLAMS monitors, EPA determined that the Bay Area had 
attained the NAAQS without adopting all of these rules. Based on the 
determination that the area was attaining without benefit of additional 
NO<INF>X</INF> reductions, it was apparent that such reductions would 
not contribute to attainment of the ozone NAAQS. Thus, the Bay Area 
qualified for a waiver under the test provided in subsection 
182(f)(1)(A). Therefore, the Bay Area requested, and EPA approved, a 
NO<INF>X</INF> waiver under that subsection. One commenter points out 
that the waiver was granted in the same notice as the redesignation to 
attainment, arguing that this fact supports the position that the 
waiver must remain in effect. However, the waiver was acted on in the 
same notice so that the area could be redesignated without first 
meeting any remaining part D NO<INF>X</INF> requirements. Because the 
Agency was ready to act on both requests at the same time, it saw no 
reason to hold up the redesignation so that it could grant the 
NO<INF>X</INF> waiver first.
    The NO<INF>X</INF> waiver acts only to relieve an ozone 
nonattainment area from subpart 2 nonattainment area NO<INF>X</INF> 
requirements. Once an area is redesignated to attainment these 
requirements no longer apply and a NO<INF>X</INF> waiver is irrelevant. 
Moreover, as the May 27, 1994 John Seitz guidance memo cited above 
points out, the NO<INF>X</INF> exemption test set forth in section 
182(f)(1)(A) asks only if additional reductions of NO<INF>X</INF> would 
contribute to attainment of the ozone NAAQS, not whether they would 
contribute to maintenance of the standard once attainment is confirmed 
through redesignation to attainment. Recognition of this by both the 
BAAQMD and EPA is inherent in the fact that the Bay Area's maintenance 
plan contingency measures, approved as part of the redesignation to 
attainment, are nearly all NO<INF>X</INF> measures.
    The commenters cite language in the May 27, 1994, guidance to 
support their position that EPA must notify the state and provide 
notice in the Federal Register in order to revoke NO<INF>X</INF> 
exemptions. However, this language deals with a situation where a 
nonattainment area is granted a NO<INF>X</INF> waiver based upon clean 
air quality data, the area is not redesignated to attainment, and the 
area subsequently violates the ozone NAAQS. In this situation the 
exemption must be revoked because the area remains a nonattainment area 
and, unless revoked, the exemption would continue, inappropriately, to 
apply. Such is not the case with an area, such as the Bay Area, which 
is redesignated to attainment and thereby becomes a maintenance area. 
In such areas the exemption, which applies to nonattainment areas, by 
its terms no longer applies.\11\
---------------------------------------------------------------------------

    \11\ Sections I.C. and II.A. of a later guidance document 
entitled ``Conformity: General Preamble for Exemption from Nitrogen 
Oxides Provisions expands on this point.'' See 59 FR at 31239-40, 
including note 1 (June 17, 1994).
---------------------------------------------------------------------------

    The commenters argue that EPA should not take any action to revoke 
the NO<INF>X</INF> exemption because it remains appropriate due to the 
commenters'

[[Page 37273]]

position that the Bay Area is ``hydrocarbon limited, and * * * 
NO<INF>X</INF> reduction measures may elevate ozone concentrations * * 
*.'' Even assuming that this is true, there is no legal basis for 
retaining the NO<INF>X</INF> exemption. The Bay Area's exemption was 
granted based on three years of clean air quality data. After 43 
exceedances and 17 violations of the ozone NAAQS in two years, the 
basis for the exemption no longer exists.
    The commenters' concerns regarding the relationship between 
NO<INF>X</INF> emissions and ozone formation in the Bay Area are 
appropriately addressed through the District's SIP revision process. 
Because the Bay Area is being redesignated under subpart 1 of the Act, 
there are no mandatory NO<INF>X</INF> measures which must be adopted. 
On the other hand, the Bay Area may not eliminate from the SIP any 
existing NO<INF>X</INF> controls without a demonstration that such 
revision would not interfere with progress, attainment, or other 
applicable requirements of the Act (CAA section 110(l)). In response to 
the redesignation, EPA expects CARB and BAAQMD to pursue whatever 
combination of VOC and NO<INF>X</INF> reductions is most consistent 
both with expeditious attainment in the Bay Area and with the State's 
determination of appropriate and necessary emissions levels in the Bay 
Area consistent with the attainment and maintenance requirements of 
downwind areas. In view of the fact that nitrates appear to constitute 
more than one third of the Bay Area's fine particulate matter, EPA also 
recommends that the Bay Area take into account the role of 
NO<INF>X</INF> emissions reductions in the control of fine 
particulates.
d. Attainment Deadline
    Comment: The 1999 attainment deadline (assuming that attainment is 
to be based on 1997-99 air quality) is unrealistic, since most of the 
1998 season will have passed before the control measure SIP submittal 
to EPA; consequently the plan will affect emissions only for 1999.
    Response: The commenters appear to have misunderstood EPA's 
proposal. In accordance with the Agency's interpretation of the CAA 
requirement that plans ``provide for attainment,'' under a 1999 
attainment deadline, the State would need only show that its SIP 
includes sufficient emission reductions in effect by the start of the 
1999 smog season to ensure that no more than one exceedance at any 
monitor will occur in 1999. Moreover, EPA's proposal noted that, under 
the terms of CAA section 172(a)(2)(C), the area may be eligible for up 
to 2 1-year extensions of the attainment deadline if no more than 1 
exceedance occurred in the year preceding the extension and the SIP is 
fully implemented. Finally, EPA notes that the same commenters arguing 
against a 1999 attainment deadline also claim that there is already 
strong evidence that the Bay Area will not experience future 
violations, since no exceedances were recorded in 1997 and both CARB 
and BAAQMD project that the emissions inventory will continue to 
decline. EPA recognizes that the proposed 1999 deadline may be 
difficult to meet if the attainment assessment demonstrates that 
substantial additional control measures are needed. In an effort to 
balance the time constraints associated with SIP adoption and submittal 
with the goal of protecting public health as quickly as possible, EPA 
has decided to extend the attainment deadline by one year to November 
15, 2000.
    Comment: Redesignation of the Bay Area will have no effect on air 
quality within the time frame proposed by EPA. The time from the start 
of rule development to achievement of the reductions is generally well 
over 18 months. Consequently, implementation of control measures would 
not occur until after the end of the 1999 ozone season. If EPA is 
seeking only to add federal enforceability to existing state air 
quality control requirements, then redesignation is clearly nothing 
more than a paperwork exercise since those control requirements are 
already in place.
    Response: As discussed earlier, EPA wants the District to focus on 
near-term emission reductions, not paperwork. Because the District has 
already identified additional control measures in its 1997 California 
Clean Air Act plan, these measures could be used for a new federal plan 
and implemented sooner than initially planned to achieve near term 
emission reductions. Otherwise, under the California Clean Air Act 
plan, the Bay Area would not implement these measures until 2000 or 
later. EPA also believes that it is important to make federally 
enforceable all of the control measures needed to bring the Bay Area 
into attainment. This provides further assurance to the public that the 
control measures will be implemented and the emission reductions needed 
to protect public health achieved.
e. Planning Schedule
    Comment: EPA's SIP schedule provides insufficient time to complete 
planning processes, public involvement, and adoption, since the co-lead 
agency planning process normally requires 15 months, California 
Environmental Quality Act (CEQA) requirements for public review must be 
satisfied under State law, at least 2 months are required for CARB 
review prior to submittal, and the regulated community needs adequate 
lead time to change or install new controls. The BAAQMD also concluded 
that more time to prepare a plan for the 1-hour ozone NAAQS would not 
result in a better plan, better air quality, or better health. The 
prudent course, according to the BAAQMD, is to focus on the new 8-hour 
NAAQS.
    Response: EPA acknowledges the time constraints associated with SIP 
development, adoption, and submittal. On the other hand, EPA does not 
expect that the agencies will launch a wholly new planning exercise but 
rather that they will continue the 1997 Clean Air Plan planning effort, 
adding only an attainment assessment using available data and technical 
analyses and adjustments to the control measures that may be necessary 
to ensure expeditious attainment. In an effort to be responsive to the 
District's scheduling concerns without sacrificing near term public 
health protections, EPA has agreed to allow the State to submit only 
one official SIP revision on June 15, 1999 based on the District's 
commitment to submit a draft of the emissions inventory and attainment 
assessment to EPA by November 25, 1998. In committing to submit a draft 
inventory and assessment within 5 months after signature of the final 
redesignation by the Regional Administrator, the District also agreed 
to hold an early public workshop on the inventory and assessment. 
(Letter from Ellen Garvey, BAAQMD; Eugene Leong, ABAG; and Lawrence 
Dahms, MTC to Felicia Marcus dated June 23, 1998.) These changes not 
only extend the time frames contained in the proposal but also enable 
the District to hold one public hearing for all three elements of the 
SIP revision.
3. Comments on Miscellaneous Issues
a. Conformity
    Comment: Several commenters questioned the effect of Bay Area 
redesignation on transportation conformity. One commenter argued that 
it would be inconsistent with CAA section 176(c) if EPA were to 
determine that the emissions budget from a new Bay Area SIP submittal 
applied simultaneously with the emissions budget in the currently-
approved Bay Area maintenance plan.
    Response: Today's action does not have an immediate effect on 
transportation conformity in the Bay

[[Page 37274]]

Area. The Bay Area currently has an approved ozone maintenance plan and 
the budgets in this plan continue to apply. Any EPA action with 
potential effects on transportation conformity will take place in the 
context of EPA's review of the Bay Area's June 15, 1999 SIP submittal.
    The transportation conformity rule does not directly address a 
situation, like that in the Bay Area, where an approved maintenance 
plan proves to be inadequate and the area is redesignated and required 
to submit a new plan. However, EPA believes the correct interpretation 
of the conformity rule would require any new budgets contained in the 
June 15, 1999 submittal to become effective after a 45-day review 
period unless EPA finds them inadequate. EPA will continue to work with 
the US Department of Transportation (DOT) to resolve DOT's concerns 
regarding the interpretation of the rule and simultaneous applicability 
of budgets and will make a final policy decision in the future.
b. Congestion Mitigation and Air Quality (CMAQ) Funding
    Comment: Redesignation of the Bay Area to nonattainment without a 
classification could jeopardize the Bay Area's continued eligibility 
for CMAQ funding pursuant to either current law or the pending bills 
for reauthorization of the Intermodal Surface Transportation Efficiency 
Act (ISTEA).
    Response: Under the Transportation Equity Act for the 21st Century 
(TEA-21), the new transportation funding legislation, signed recently 
by the President, redesignation of the Bay Area to nonattainment for 
ozone will not affect CMAQ eligibility. In fact, the Bay Area will be 
eligible for more CMAQ funding than they were allocated under ISTEA, 
the previous transportation funding legislation.
c. Unfunded Mandates Reform Act (UMRA)
    Comment: Some commenters asserted that EPA failed to comply with 
the Unfunded Mandates Reform Act (UMRA), and should have prepared a 
statement in accordance with section 202 of UMRA. In the proposal, EPA 
stated that the redesignation did not trigger section 202, as it did 
not contain any federal mandate because it did not impose any 
enforceable duties, and that even if it did contain a federal mandate, 
the resulting expenditures would not exceed $100 million in any one 
year. Commenters argued that the redesignation does impose an 
enforceable duty upon California and the BAAQMD, because failure to 
adopt a SIP would result in loss of highway funds and, in addition, 
result in more stringent emissions offset requirements for new and 
modified stationary sources, result in loss of grants, and trigger a 
duty for EPA to issue a federal implementation plan (FIP).
    One commenter also argued that the redesignation constitutes a 
private sector mandate under UMRA, because it requires the District to 
submit regulations or enforceable commitments to adopt regulations 
imposing duties on emissions sources. However, the test for a private 
sector mandate under UMRA is whether it ``would impose an enforceable 
duty upon the private sector.'' Clearly the redesignation has created 
no duty enforceable against any private party. The commenter also 
states that EPA is requiring that new source review permitting 
requirements, applicability thresholds and offset ratios be set ``by 
analogy'' at the levels otherwise applicable to moderate nonattainment 
areas. These are the levels currently in effect in the Bay Area as a 
result of the area's previous status as a moderate nonattainment area 
and therefore present no new burdens on private parties in any event.
    Some commenters also asserted that the redesignation will impose 
costs in excess of $100 million. This estimate was based on projected 
costs of complying with the types of requirements the commenter 
believes would be imposed if the state were to adopt a SIP.
    Response: EPA does not believe that it is necessary to resolve the 
issues of whether the redesignation constitutes a ``federal mandate'' 
or requires consideration of costs to private parties, as well as costs 
to the state, under UMRA.
    EPA believes that even if it were construed as a federal mandate, 
with costs to private parties to be considered as well as costs to the 
state, those costs could not reasonably be expected to exceed $100 
million in any one year. EPA has conducted an analysis of potential 
costs to private parties. In terms of the impact on the private sector, 
the BAAQMD has yet to determine the amount of needed reductions and the 
mix of VOC and NO<INF>X</INF> measures to achieve the needed 
reductions. EPA used cost data developed for the July 1997 ``Regulatory 
Impact Analyses for the Particulate Matter and Ozone National Ambient 
Air Quality Standards and Proposed Regional Haze Rule,'' as the basis 
of its analysis. This data shows that the national average cost for 
reasonably available VOC control measures is higher than the national 
average cost for reasonably available NO<INF>X</INF> control measures 
($2,652 per ton per year for VOC; $1,937 per ton per year for 
NO<INF>X</INF>, expressed in 1990 dollars). EPA assumes that reductions 
of both VOC and NO<INF>X</INF> will be necessary to bring the Bay Area 
back into attainment. However, for the purpose of this analysis EPA 
assumed that all the needed reductions would come from VOC measures 
because this approach would over-estimate the actual costs. In 
addition, EPA assumed that VOC emissions may need to be reduced by as 
much as 80 tons per day (approximately 28,800 tons per year) above and 
beyond measures currently underway at the State and local levels. This 
amount of reductions is significantly greater than that assumed to be 
needed by the various interested parties. During the extensive 
stakeholder process EPA has heard that anywhere from 0 to 50 tons per 
day in additional reductions will be necessary. Thus, by assuming 80 
tons per day for the purposes of this analysis, EPA believes that it is 
significantly overestimating the costs. Even by employing cost numbers 
and tons to be reduced that are significantly higher than what EPA 
believes the actual results will be, the impacts would still be less 
than $100 million (i.e., $76,377,600).
    As previously discussed in Section III.D.3.b. of this notice, one 
commenter indicated that the redesignation without classification under 
the Clean Air Act would result in loss of highway funds in excess of 
$100 million under ISTEA and that this should be viewed as the cost of 
the ``mandate''. The interplay of these two distinct statutes, were it 
to result in a significant decrease in highway funding to the Bay Area, 
would not be a mandate as it is defined in UMRA, as it would impose no 
enforceable duty on State, local or tribal governments. Moreover, as 
discussed above in section III.D.3.b., EPA, in consultation with the 
Department of Transportation, has determined that the redesignation 
will not result in any significant loss of highway funding to the Bay 
Area under the recently passed reauthorization of ISTEA.
d. Procedural Obligations Under CAA Section 107 and the Administrative 
Procedures Act (APA)
    Comment: EPA has failed to follow the procedure set forth in 
section 107(d)(3) of the Act for redesignating areas, and consequently 
has failed to follow procedural requirements of the Administrative 
Procedure Act.
    Response: The commenters misinterpret both the plain language of 
sections 107(d)(3) (A), (B) and (C), and

[[Page 37275]]

the intent of these sections. As described more fully below, the 
exchange of correspondence between EPA and a State provided for by 
section 107(d)(3) is intended to address situations where there is 
agreement that a redesignation is necessary, but differing opinions 
concerning the boundaries of the area, or portion thereof, to be 
redesignated.
    Section 107(d)(3) of the Act sets forth the procedure for 
redesignation of areas and provides that the Administrator may at any 
time notify the Governor of any state that available information 
indicates that the designation of any area should be revised. Section 
107(d)(3)(B) provides that the Governor has 120 days from receipt of 
this letter to submit to the Administrator such redesignation, if any, 
of the appropriate area (or areas) or portion thereof as the Governor 
considers appropriate.
    Section 107(d)(3)(C) contemplates four potential outcomes which 
flow from a Governor's response to notification from EPA that an area 
should be redesignated:
    (1) The Governor concurs with EPA's notification and submits a 
redesignation of the same area, or portion thereof, that was proposed 
by EPA. In this event, section 107(d)(3)(C) provides that EPA must 
promulgate the redesignation no later than 120 days after receipt of 
the Governor's redesignation submittal. No further correspondence with 
the Governor is required.
    (2) The Governor concurs with EPA's notification that a 
redesignation is necessary, but submits a redesignation of the area 
with different boundaries, or submits a redesignation of only a portion 
of the area that was proposed by EPA. If EPA agrees with the Governor's 
redesignation submittal, section 107(d)(3)(C) provides that EPA must 
promulgate the redesignation no later than 120 days after receipt of 
the Governor's redesignation submittal. No further correspondence with 
the Governor is required.
    (3) The Governor concurs with EPA's notification that a 
redesignation is necessary, but submits a redesignation of the area 
with different boundaries, or submits a redesignation of only a portion 
of the area that was proposed by EPA. If EPA disagrees with the 
Governor's submittal, section 107(d)(3)(C) provides that EPA may make 
such modifications as it deems necessary, but must notify the State 60 
days before promulgation of the redesignation in order to provide the 
State with an opportunity to demonstrate why any proposed modification 
is inappropriate.
    (4) The Governor does not submit a redesignation for an area, or 
portion thereof. Section 107(d)(3)(C) provides that EPA ``shall 
promulgate such redesignation, if any, that the Administrator deems 
appropriate.'' No further correspondence with the Governor is required.
    In the instance at hand, EPA notified the Governor of California by 
letter dated August 21, 1997, that the Bay Area should be redesignated 
to nonattainment for ozone, based on available air quality data 
demonstrating 43 exceedances and 17 violations of the standard in the 
two-year period from 1995 through 1996. The Governor of California did 
not submit a redesignation of the Bay Area. Rather, the Governor 
responded, by letter dated December 10, 1997, that he does not believe 
any redesignation is appropriate. Thus, EPA's action is governed by the 
last sentence of section 107(d)(3)(C), which provides that EPA ``shall 
promulgate such redesignation, if any, that the Administrator deems 
appropriate.''
    EPA has complied with the requirements of both the Clean Air Act 
and the Administrative Procedure Act in its action to redesignate the 
Bay Area. EPA has conducted notice and comment rulemaking, fully 
considering all comments received, including those provided by the 
Governor. Contrary to the assertions of the commenter, there is nothing 
in either statute which precludes EPA from proposing a redesignation at 
any time following notification of the Governor. EPA is free to solicit 
comment from the general public simultaneously with the Governor's 
notification, at any time during the 120 day period for the Governor's 
response, or at any time following the Governor's response, so long as 
EPA complies with the time periods set forth in section 107(d)(3), and 
its general duty to consider and respond to all comments.
    While it is true that EPA made minor changes to the redesignation 
requirements set out in the Governor's notification when the Agency 
published its proposal, the State was in no way prejudiced by this 
fact. The changes did not relate to area boundaries, or portions 
thereof, and therefore did not invoke the notification procedures. 
EPA's proposed rulemaking provided a 60 day public comment period and 
the State was provided with a copy of the proposal on December 11, 
1997, 8 days before it was published in the Federal Register. The State 
provided EPA with comments on its proposal on February 17, 1998. These 
comments, as well as the Governor's response letter, have been fully 
considered in EPA's decision to redesignate the Bay Area.

IV. Final Action

A. Overview

    As discussed in the response to comments, EPA remains convinced 
that the Agency's appropriate action, in the face of numerous and 
widespread violations of the 1-hour ozone standard in the Bay Area, is 
to finalize the redesignation of the San Francisco Bay Area to 
nonattainment for the 1-hour ozone NAAQS. EPA takes this action under 
CAA section 107(d), based specifically on the Bay Area's 17 violations 
of the 1-hour ozone NAAQS over the 3-year period, 1994-1996.
    EPA also finalizes the Agency's determination that the Bay Area 
should not be classified under subpart 2 of the CAA, but rather should 
be required to meet applicable requirements of CAA subpart 1.

B. SIP Requirements and Deadlines

    In accordance with CAA sections 110 and 172, the State must submit 
by June 15, 1999 a SIP revision containing: (1) The existing 1995 
emissions inventory for NO<INF>X</INF> and VOC in the Bay Area; (2) an 
assessment, using available data and technical analyses, of the 
emission reductions needed to attain the federal 1-hour ozone standard; 
and (3) adopted regulations and/or control measures with enforceable 
commitments to adopt and implement the control measures in regulatory 
form by specified dates. The extension for the emissions inventory and 
attainment assessment submittal is being granted in response to a 
commitment made by the Air District (Letter from Ellen Garvey, BAAQMD 
et al. to Felicia Marcus, EPA Region IX, dated June 23, 1998) to 
provide the inventory and assessment to EPA in draft within 5 months of 
the final redesignation. This early, informal submittal will allow EPA 
to review the draft inventory and assessment and work with the District 
to address any deficiencies. The District also agreed to hold an early 
public workshop on the draft inventory and assessment. The adopted 
regulations and control measures, and the schedule for adoption and 
implementation of such measures, must be sufficient to meet reasonable 
further progress and attain the 1-hour NAAQS expeditiously but no later 
than November 15, 2000. EPA emphasizes that the submittal due on June 
15, 1999 must include contingency measures that go into effect if the 
Bay Area does not attain the NAAQS by the prescribed deadline in order 
to address the specific requirement of CAA section 172(c)(9).

[[Page 37276]]

For a more complete discussion of subpart 1 elements applicable to 
these SIP submittals, the reader is referred to the proposal (62 FR 
66580-66581).

 Schedule of Submittals State Implementation Plan for Ozone for the San 
                           Francisco Bay Area                           
------------------------------------------------------------------------
            Action/SIP submittal                         Date           
------------------------------------------------------------------------
1995 emissions inventory for VOC and NO<INF>X....  Draft--11/25/98 Final--6/ 
                                               15/99                    
Assessment, employing available data and      Draft--11/25/98 Final--6/ 
 technical analyses, of the level of           15/99                    
 emission reductions needed to attain the                               
 current 1-hour ozone National Ambient Air                              
 Quality Standard (NAAQS). This assessment                              
 should take into account the meteorological                            
 conditions and ambient concentrations                                  
 associated with the violations of the ozone                            
 NAAQS in the period 1995-6, and should be                              
 based on likely control measures for                                   
 reducing VOC and NO<INF>X emissions.                                        
Adopted regulations and/or control measures,  6/15/99                   
 with enforceable commitments to adopt and                              
 implement the control measures in                                      
 regulatory form by specified dates,                                    
 sufficient to meet reasonable further                                  
 progress and attain the 1-hour NAAQS                                   
 expeditiously but no later than November                               
 15, 2000.                                                              
------------------------------------------------------------------------

C. Changes from Proposal

    In this final action, EPA has amended both the schedule and content 
of the proposed SIP requirements in response to public comments, as 
discussed above in section III.D.2. The changes are as follows:

------------------------------------------------------------------------
                                             Final--weekend emissions   
 Proposal--weekend emissions inventory    inventory and CO inventory not
       and CO inventory required                    required.           
------------------------------------------------------------------------
Emissions inventory and attainment       Emissions inventory and        
 assessment due to EPA 5/1/98.            attainment assessment due to  
                                          EPA 6/15/99. (Commitment to   
                                          submit draft by 11/25/98.)    
Adopted regulations and/or control       Adopted regulations and/or     
 measures with enforceable commitments    control measures with         
 due 9/1/98.                              enforceable commitments, and  
                                          final emissions inventory and 
                                          attainment assessment due 6/15/
                                          99.                           
Attainment date of 11/15/99............  Attainment date of 11/15/2000. 
------------------------------------------------------------------------

V. Emission Reduction Opportunities

    Under EPA's final redesignation, the Air District and its co-lead 
agencies are responsible for determining the appropriate mix of control 
measures that will most effectively bring the Bay Area into attainment 
with the 1-hour ozone standard. The Bay Area, like other major 
metropolitan areas, is experiencing rapid economic growth and an 
increasing population that may lead to emission increases from both the 
stationary and mobile source sectors. Given these circumstances, the 
Air District may wish to explore new and innovative approaches for 
achieving reductions from both source sectors. EPA believes that 
traditional control strategies aimed at reducing emissions from 
stationary sources are essential to any air pollution control program. 
At the same time, EPA supports efforts to develop alternative emission 
reduction methods. Mobile source emissions, for example, make up the 
majority of the ozone precursor inventory in many urban areas, 
including the Bay Area, but air pollution control agencies often have 
difficulty regulating these emissions. Mobile sources are therefore 
good candidates for non-traditional approaches. EPA encourages the 
BAAQMD and its co-lead agencies to identify opportunities for 
innovation, in addition to traditional control strategies, as they 
develop measures to bring the Bay Area into attainment of the ozone 
standard.

A. Stationary Sources

    Stationary sources in the Bay Area emit approximately 152 tons of 
VOC and 157 tons of NO<INF>X</INF> per day (Bay Area Clean Air Plan, 
Volume 1, p.21). This current level of emissions reflects tremendous 
progress in stationary source reductions over the past 20 years. 
Nonetheless, BAAQMD will need to assess whether additional stationary 
source measures are needed to help the Bay Area attain the federal 1-
hour ozone standard. Recently, BAAQMD proposed in its 1997 Clean Air 
Plan several stationary source measures believed to be both feasible to 
implement and effective at reducing emissions. EPA expects that the 
District will analyze which control measures from this plan are needed 
to attain the standard and assess whether any measures beyond those 
contained in the plan are also needed. If additional measures are 
needed, the District may want to consider stationary source measures 
suggested by public commenters on the redesignation proposal such as 
improving tank and flare design, eliminating exemptions from certain 
District rules, and improving controls on energy sources (e.g., natural 
gas fired boilers and privately owned and operated power plants). 
However, EPA is not requiring adoption of these or any other specific 
controls; it is the BAAQMD's authority and responsibility to determine 
the appropriate mix of Bay Area measures.

B. Transportation Control Measures

    Given that on-road motor vehicles emit 43% of the total VOC and 47% 
of the total NO<INF>X</INF> emissions in the Bay Area (Bay Area 1997 
Clean Air Plan, Volume 1, p.7), that vehicle travel has been steadily 
increasing, and that the Metropolitan Transportation Commission (MTC) 
directs the allocation of billions of dollars of transit funds, MTC 
plays an important role in the Bay Area's overall strategy to attain 
the 1-hour ozone standard. MTC is currently updating its 20-year plan 
and will continue to revise this plan every two years. MTC's planning 
process offers a good opportunity to incorporate air quality goals into 
both long term planning and short term projects. In addition, MTC is 
required to identify possible transportation control measures (TCMs) as 
part of the California Clean Air Plan (CAP). The Bay Area's 1997 CAP 
contained an estimated 7 tons per day (3 tpd VOC, 4 tpd NO<INF>X</INF>) 
worth of potential reductions from TCMs for the year 2000 and even more 
for later years (Bay Area 1997 Clean Air Plan, Volume 1, p.49). If 
these measures were adopted and submitted for SIP approval, they could 
make a measurable contribution toward attainment of the 1-hour ozone 
standard. Finally, MTC may be able to help reduce emissions by 
reevaluating

[[Page 37277]]

the way it distributes transportation funds, the way it finances 
transportation projects, its policies with respect to land use and 
transportation and giving priority to the most cost-effective (i.e., 
tons of emission reduction per dollar spent) investments.

C. Voluntary Measures

    EPA encourages the State, District and co-lead agencies to explore 
innovative approaches to achieving their air quality goals. One 
possible area for innovation is the mobile source arena. Mobile sources 
emit 75% of the total NO<INF>X</INF> emissions and 58% of the total VOC 
emissions in the Bay Area (Bay Area 1997 Clean Air Plan, Volume 1, p. 
7). Though there have been great strides in reducing vehicle emission 
rates, transportation emissions continue to be a problem due to large 
increases in vehicle miles travelled (VMT). Regulatory agencies and 
others are therefore developing voluntary mobile source strategies that 
promote changes in local transportation sector activity levels and 
changes in in-use vehicle and engine fleet composition to complement 
regulatory programs.
    Voluntary mobile source control measures have the potential to 
contribute to, in a cost-effective manner, emission reductions needed 
for attainment of the NAAQS. EPA believes, therefore, that SIP credit 
is appropriate for voluntary mobile source emission reduction programs 
(VMEPs) where we have confidence that the measures can achieve emission 
reductions. Consistent with that belief, EPA issued its October 23, 
1997 ``Guidance on Incorporating Voluntary Mobile Source Emission 
Reduction Programs in State Implementation Programs'' (signed by 
Richard Wilson, Acting Assistant Administrator for Air and Radiation). 
The guidance lays out the terms and conditions for establishing and 
implementing VMEPs and the guidelines for SIP approval. In light of the 
innovative nature of voluntary measures and EPA's inexperience with 
quantifying their emission reductions, EPA's guidance limits the amount 
of emission reductions allowed for VMEPs in a SIP to 3% of the total 
projected future year emission reductions required to attain the 
appropriate NAAQS. In addition, the guidance requires that a state or 
local agency track on an annual basis the resulting emissions effect of 
the voluntary measure and also commit to remedy any shortfall if the 
VMEP does not achieve projected emission reductions.
    The BAAQMD and co-lead agencies may wish to take advantage of the 
flexibility provided by EPA's voluntary mobile source measures policy 
as they develop their SIP control strategies in response to the 
redesignation. EPA encourages the three co-lead agencies to work with 
the business and environmental communities that may have an interest in 
developing or participating in such innovative strategies, as 
stakeholder involvement is a critical factor in building community 
acceptance and ultimate success. For example, the Silicon Valley 
Manufacturing Group has worked with businesses to develop the ECOPASS 
program; this is an employer-sponsored alternative commute program that 
is designed to get employees out of their cars and onto public transit. 
Another example is the BAAQMD's ``Spare-the-Air'' Program, a public 
education campaign that encourages citizens to refrain from or reduce 
activities that produce emissions of ozone precursors. The program 
currently enjoys the participation of 475 businesses and is continuing 
to grow with the help of the Bay Area business community. EPA applauds 
BAAQMD and the business community for successfully implementing these 
innovative and important programs. The BAAQMD has not yet submitted to 
EPA its plan for quantifying and tracking the impacts of these programs 
on an on-going basis, and therefore EPA has not yet evaluated how the 
District will ensure that the criteria presented in the VMEP guidance 
will be met. However, EPA is currently consulting with the BAAQMD 
regarding quantification and tracking of emissions associated with 
these programs and will continue to work with the District to clarify 
the VMEP policy. We encourage the District and its co-lead agencies to 
consider and pursue other innovative approaches as they evaluate 
measures needed to attain the ozone standard.

D. Enhanced Inspection and Maintenance

    While the Bay Area has both the flexibility and the responsibility 
to determine the appropriate mix of control measures that are needed to 
attain the federal 1-hour ozone standard, EPA believes that emission 
reductions from implementation of an enhanced inspection and 
maintenance program would make a substantial contribution to attainment 
in the Bay Area. The California Bureau of Automotive Repair has 
indicated that implementation of the California Smog Check 2 program 
(California's enhanced I/M program) would result in an incremental 
benefit of 12 tons per day VOC and 14 tons per day NO<INF>X</INF>. EPA 
is hopeful that Bay Area leaders will work together to pursue 
authorization and expeditious implementation of an enhanced I/M 
program. Furthermore, implementation of an enhanced I/M program in the 
Bay Area would address some of the equity concerns raised by Bay Area's 
downwind neighbors who are impacted by pollution from the Bay Area and 
are required under federal and State law to implement an enhanced I/M 
program. EPA does not believe, however, that enhanced I/M is the 
complete answer to Bay Area's ozone nonattainment problem. EPA believes 
that the BAAQMD should evaluate measures aimed at both the stationary 
and mobile source sectors that will work together to achieve healthy 
air in the Bay Area.

E. Mitigating Emissions Increases From Oakland Seaport and Airport 
Expansion Projects

    The Port of Oakland is planning to expand its operations over the 
next several years. Dredging operations, which will provide larger 
vessels with access to the Port, will begin in February 2000. Emissions 
of CO and VOCs from dredging and related construction activities are 
not expected to be significant. Gas or diesel powered dredging 
equipment, however, emits significant quantities of NO<INF>X</INF>; the 
draft EIS/EIR prepared by the U.S. Army Corps of Engineers (COE) for 
the port expansion estimates that total construction-related 
NO<INF>X</INF> emissions, gas or diesel powered dredging equipment, 
would be in the range of 1500 to 1700 tons over the four-year period 
(2000-2004) during which dredging will occur. The COE, however, has 
subsequently indicated that it plans to use electric dredging equipment 
which would reduce the potential construction-related NO<INF>X</INF> 
emissions to 330 tons over four years, or an average of 83.5 tons per 
year. The dredging and related construction activities performed by the 
COE are subject to the General Conformity regulations (40 CFR 93.150), 
which require federal agencies to demonstrate that emissions from 
federal projects conform to the approved State Implementation Plan if 
the emissions are above ``de minimis'' levels defined in 40 CFR 93.153. 
Because the Corps of Engineers will be employing electric dredging 
equipment in its construction activities, and limiting the number of 
disposal trips per year, the emissions will be below the 100 ton per 
year NO<INF>X</INF> de minimis level established in the conformity 
regulations and a conformity determination is therefore not required. 
The Corps' plan to use electric dredging equipment will help to ensure 
cleaner air for the surrounding community and the Bay Area as a whole 
and contribute

[[Page 37278]]

to efforts to achieve attainment with the ozone standard.
    Once construction of the Port expansion project is complete, 
operational emissions increases are projected to be significant. 
Because the long-term emissions from new vessels, trucks, trains, 
terminal operations, and employee vehicles are considered to be 
indirect emissions that cannot be practicably controlled by and are not 
under a continuing program responsibility of the COE, these activities 
are exempt from the conformity requirements. EPA believes however, that 
mitigation of these long-term emissions may be an important part of the 
Bay Area's strategy for attaining and maintaining not only the 1-hour 
ozone NAAQS, but the revised 8-hour and PM2.5 NAAQS as well. For this 
reason, EPA encourages the Port to work with BAAQMD and MTC to identify 
opportunities to mitigate long-term emission increases from the 
project. EPA also welcomes opportunities to share information regarding 
mitigation techniques that have been identified during discussions with 
the South Coast AQMD on ports and airports.
    Plans to expand the Oakland Airport are also underway and EPA 
believes that the project will be subject to the General Conformity 
requirements. EPA believes that there are opportunities to mitigate 
emissions increases associated with the expansion and again welcomes 
the opportunity to share information resulting from discussions with 
the South Coast regarding reducing airport emissions.

VI. Administrative Requirements

A. Executive Order (E.O.) 12866

    Under E.O. 12866, (58 FR 51735, October 4, 1993), EPA is required 
to determine whether today's action is a ``significant regulatory 
action'' within the meaning of the E.O., and therefore should be 
subject to OMB review, economic analysis, and the requirements of the 
E.O. See E.O. 12866, sec. 6(a)(3). The E.O. defines, in sec. 3(f), a 
``significant regulatory action'' as a regulatory action that is likely 
to result in a rule that may meet at least one of four criteria 
identified in section 3(f), including,
    (1) have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    EPA has determined that the redesignation to nonattainment 
finalized today, as well as the establishment of SIP submittal 
schedules, would result in none of the effects identified in E.O. 12866 
sec. 3(f). Under section 107(d)(3) of the Act, redesignations to 
nonattainment are based upon air quality considerations. The finding, 
based on air quality data, that the Bay Area is not attaining the ozone 
NAAQS and should be redesignated to nonattainment does not, in and of 
itself, impose any new requirements on any sectors of the economy. 
Similarly, the establishment of new SIP submittal schedules merely 
establishes the dates by which SIPs must be submitted, and does not 
adversely affect entities.

B. Regulatory Flexibility

    Under the Regulatory Flexibility Act, 5 U.S.C. section 601 et. 
seq., EPA must prepare a regulatory flexibility analysis assessing the 
impact of any proposed or final rule on small entities. 5 U.S.C. 
sections 603 and 604. Alternatively, EPA may certify that the rule will 
not have a significant economic impact on a substantial number of small 
entities. Small entities include small businesses, small not-for-profit 
enterprises, and government entities with jurisdiction over populations 
of less than 50,000.
    A redesignation to nonattainment under section 107(d)(3), and the 
establishment of a SIP submittal schedule for a reclassified area, do 
not, in and of themselves, directly impose any new requirements on 
small entities. See Mid-Tex Electric Cooperative, Inc. v. FERC, 773 
F.2d 327 (D.C. Cir. 1985) (agency's certification need only consider 
the rule's impact on entities subject to the requirements of the rule). 
Instead, this rulemaking simply makes a factual determination and to 
establish a schedule to require the State to submit SIP revisions, and 
does not directly regulate any entities. Because EPA is applying the 
same permitting applicability thresholds and offset ratios applicable 
to moderate areas, no additional sources will be subject to these 
requirements as a result of EPA's action. Therefore, pursuant to 5 
U.S.C. 605(b), EPA certifies that today's action does not have a 
significant impact on a substantial number of small entities within the 
meaning of those terms for RFA purposes.

C. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, when EPA promulgates ``any general notice of proposed 
rulemaking that is likely to result in promulgation of any rule that 
includes any Federal mandate that may result in the expenditures by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more'' in any one year. A ``Federal 
mandate'' is defined, under section 101 of UMRA, as a provision that 
``would impose an enforceable duty'' upon the private sector or State, 
local, or tribal governments,'' with certain exceptions not here 
relevant. Under section 203 of UMRA, EPA must develop a small 
government agency plan before EPA ``establish[es] any regulatory 
requirements that might significantly or uniquely affect small 
governments.'' Under section 204 of UMRA, EPA is required to develop a 
process to facilitate input by elected officers of State, local, and 
tribal governments for EPA's ``regulatory proposals'' that contain 
significant Federal intergovernmental mandates. Under section 205 of 
UMRA, before EPA promulgates ``any rule for which a written statement 
is required under [UMRA sec.] 202,'' EPA must identify and consider a 
reasonable number of regulatory alternatives and either adopt the least 
costly, most cost-effective or least burdensome alternative that 
achieves the objectives of the rule, or explain why a different 
alternative was selected.
    EPA has concluded that this rule is not likely to result in the 
promulgation of any Federal mandate that may result in expenditures of 
$100 million or more for State, local or tribal governments in the 
aggregate, or for the private sector, in any one year. It is not 
necessary to resolve here whether a redesignation would constitute a 
federal mandate.
    Even assuming that a redesignation were considered a Federal 
mandate, and it were appropriate to consider both private and public 
sector costs, the anticipated annual costs resulting from the mandate 
would not exceed $100 million to the private sector, State, local

[[Page 37279]]

and tribal governments. In terms of the impact on the private sector, 
the BAAQMD has yet to determine the amount of needed reductions and the 
mix of VOC and NO<INF>X</INF> measures to achieve the needed 
reductions. EPA used cost data developed for the July 1997 ``Regulatory 
Impact Analyses for the Particulate Matter and Ozone National Ambient 
Air Quality Standards and Proposed Regional Haze Rule,'' as the basis 
of its analysis. This data shows that the national average cost for 
reasonably available VOC control measures is higher than the national 
average cost for reasonably available NO<INF>X</INF> control measures 
($2,652 per ton per year for VOC; $1,937 per ton per year for 
NO<INF>X</INF>, expressed in 1990 dollars). EPA assumes that reductions 
of both VOC and NO<INF>X</INF> will be necessary to bring the Bay Area 
back into attainment. However, for the purpose of this analysis EPA 
assumed that all the needed reductions would come from VOC measures 
because this approach would over-estimate the actual costs. In 
addition, EPA assumed that VOC emissions may need to be reduced by as 
much as 80 tons per day (approximately 28,800 tons per year) above and 
beyond measures currently underway at the State and local levels. This 
amount of reductions is significantly greater than that assumed to be 
needed by the various interested parties. During the extensive 
stakeholder process EPA has heard that anywhere from 0 to 50 tons per 
day in additional reductions will be necessary. Thus, by assuming 80 
tons per day for the purposes of this analysis, EPA believes that it is 
significantly overestimating the costs. Even by employing cost numbers 
and tons to be reduced that are significantly higher than what EPA 
believes the actual results will be, the impacts would still be less 
than $100 million (i.e., $76,377,600).
    The cost to the State of California is the cost of developing, 
adopting and submitting any necessary SIP revision. Because that cost, 
taken in combination with private sector costs, will not exceed $100 
million, this action (even assuming it is a federal mandate) is not 
subject to the requirements of sections 202 and 205 of UMRA (2 U.S.C. 
1532 and 1535). EPA has also determined that this action would not 
result in regulatory requirements that might significantly or uniquely 
affect small governments because only the State would take any action 
as result of today's rule, and thus the requirements of section 203 (2 
U.S.C. 1533) do not apply.

D. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    This final rule is not subject to E.O. 13045, entitled ``Protection 
of Children from Environmental Health Risks and Safety Risks'' (62 FR 
19885, April 23, 1997) because this is not an economically significant 
regulatory action as defined by E.O. 12866, and because it does not 
involve decisions on environmental health risks or safety risks that 
may disproportionately affect children.

E. Submission to Congress and the General Accounting Office

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. This rule is not a 
``major'' rule as defined by 5 U.S.C. 804(2).

List of Subjects in 40 CFR Part 81

    Environmental protection, Air pollution control, National parks.

    Dated: June 25, 1998.
Felicia Marcus,
Regional Administrator, Region IX.

    Part 81, chapter I, title 40 of the Code of Federal Regulations is 
amended as follows:

PART 81--[AMENDED]

    1. The authority citation for part 81 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

    2. In Sec. 81.305, the table for California--Ozone, is amended by 
revising the entry for the San Francisco Bay Area to read as follows:


Sec. 81.305  California.

* * * * *

                                                                    California-Ozone                                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Designation                                              Classification                
          Designated Area           --------------------------------------------------------------------------------------------------------------------
                                                  Date\1\                            Type                        Date \1\                  Type         
--------------------------------------------------------------------------------------------------------------------------------------------------------
San Francisco--Bay Area:                                                                                                                                
    Alameda County.................  August 10, 1998.................  Nonattainment...................                                                 
    Contra Costa County............  ......do                          ......do                                                                         
    Marin County...................  ......do                          ......do                                                                         
    Napa County....................  ......do                          ......do                                                                         
    San Francisco County...........  ......do                          ......do                                                                         
    Santa Clara County.............  ......do                          ......do                                                                         
    San Mateo County...............  ......do                          ......do                                                                         
    Solano County (part)...........  ......do                          ......do                                                                         
    Sonoma County (part)...........  ......do                                                                                                           
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This date is November 15, 1990, unless otherwise noted.                                                                                             


[[Page 37280]]

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[FR Doc. 98-18272 Filed 7-9-98; 8:45 am]
BILLING CODE 6560-50-P